Electronic Market Trading NYSE Shares

The New York Stock Exchange has a new rival for trading shares of its listed companies: an automated system called Archipelago that this week gained access to the systems linking U.S. stock markets.

Archipelago can now execute third-market, or off-exchange, orders for NYSE-listed stocks and display buy and sell orders on the Consolidated Quotation Service, the U.S. stock price reporting mechanism.

Before, Archipelago sent most of those orders through an exchange-member firm to the NYSE floor for execution.

The Chicago-based trading venue is among a handful of electronic communication networks, or ECNs, luring clients with promises of immediacy, anonymity and lower costs in trading stocks. ECN computers match buyers and sellers directly, eliminating the need for a dealer in the middle.

Until now, ECNs have mostly traded Nasdaq stocks. Archipelago’s move into trading exchange-listed shares follows the NYSE’s repeal, in May, of a rule forcing members to trade some stocks on an exchange floor.

“We can offer much faster response times than New York,” contends Mike Cormack, Archipelago’s national sales manager.

However, whether a trade is completed on an ECN depends on whether there are buyers to match sellers, and vice versa.

Archipelago began trading 11 NYSE-listed stocks on Monday, and plans to include all of the NYSE’s more than 3,000 equity listings in a matter of days.