NYSE to Revamp, But Nixes ‘Central Book’

The New York Stock Exchange said Thursday it will make a series of sweeping changes in the way it trades stocks to keep pace with the fast-changing landscape of the securities industry.

But the exchange nixed the idea of creating a centralized “book” where all buy and sell orders for U.S. stocks would be sent.

The changes, detailed in a report adopted by the NYSE’s board, will automate more extensively the operations of the NYSE. The idea is to give investors alternatives to the traditional approach that relies on NYSE human “specialists” and floor brokers to execute trades, a culture 200 years old.

But while the Big Board is paying heed to the cry for more technological innovation, the plan reflects a determined effort to preserve its landmark Wall Street trading floor, which critics consider dated.

As part of the changes approved Thursday, the NYSE said it will lobby to scrap the Intermarket Trading System, the 1970s-era electronic link between the NYSE with its regional counterparts, the American Stock Exchange and its chief rival, Nasdaq.

The NYSE believes the ITS should be replaced with a cutting-edge system that would speed up the trading of stocks among competing markets at the best prevailing prices. But brokerages should use their own technology to find those best prices, NYSE said.

The NYSE dismissed the idea of building a single computerized system that would collect all U.S. stock orders. With one system, investors could more easily track trades and see whether they got the best possible price among competing markets, including new electronic communications networks, or ECNs, that threaten the NYSE.

The Big Board’s rejection of a proposal to create a central limit-order book, or CLOB, upset some of Wall Street’s biggest firms, the NYSE members that also supply a huge chunk of the exchange’s volume. Goldman Sachs and Merrill Lynch have fought hard for a centralized system to cut their trading costs. The NYSE is unlikely to budge on the issue.