The NYSE Trading floor partially re-opened on Tuesday, May 26, allowing Floor Brokers an opportunity to resume their business operations (with reduced headcount and restrictions in place to enforce social distancing and other safety protocols).
Floor Brokers have fueled the success of the NYSE Closing Auction, resulting in unrivaled liquidity and execution quality. Investors have swiftly resumed trading with Floor Brokers: D Orders, a flexible order type available only via the Floor, accounted for 30% of total Closing Auction volume on May 27.
As auctions once again include this valuable source of liquidity, we have seen improvement in auction execution quality. NYSE Closing Auctions regularly price stocks near their end-of-day volume-weighted average trading price, and the percentage of Closing Auctions doing so have gone up even further this week with the return of Floor Brokers.
NYSE’s Opening Auction quality has also seen an uptick this week, with the return of the Floor. Given the first minutes of trading after the open are usually the most volatile time of day, auction quality can be measured by how closely the open price tracks in line with subsequent trading. NYSE consistently excels at open pricing, and the Floor’s return has only improved this metric.
The Trading Floor is quickly resuming its critical function in the NYSE Market Model. This will help improve market quality and liquidity, particularly during critical trading events such as the MSCI index rebalances this Friday, May 29.
Activity in NYSE’s Retail Price Improvement Program for stocks not listed on the NYSE has shown strong growth since its launch last December. Tape B activity recently peaked at more than two million shares.
To enhance visibility and understanding of the Closing Auction process, NYSE has introduced a graphical interface with a trailing three months of closing imbalance feed historical data for the 1,000 largest daily Closing Auctions.
NYSE research reviewed option usage trends to end 2022 and start 2023: 2022 options market activity was generally aligned with equity market moves. Average monthly put-call volume ratio in 2022 was higher than 2021 but declined sharply at beginning of 2023. In 2022, floor traded a higher put premium relative to call but a much lower put premium in 2023. Moreover, electronic trading saw more activity in SPY and QQQ, while floor trading saw most activity in HYG. Also, floor trading had a significantly higher put-call ratio than electronic trading for days around FOMC meetings and CPI announcements over most of this period.