NYSE Requires Reports on Daily Program Trades

The New York Stock Exchange on Tuesday began requiring members to submit daily reports of their program trades, a move designed to help the exchange analyze market volatility.

Under the new rule, NYSE members and member firms must submit a log of program trades made for customers or for their own accounts, including trades executed in other markets, by the close of the second business day following the trades, the exchange said in a statement.

Members are not required, however, to identify customers for whom program trades were executed.

Program trading has been blamed for much of the market volatility at the time of the October stock market crash.

The submission of daily data will “enable the NYSE to more routinely monitor and analyze program trading activity,” the statement said.

Analysts were not surprised by the new rule, which had been announced previously.

“It’s going to require more forms, more paper work, more time, and it’s going to cost money,” noted Perrin Long, an analyst at Lipper Analytical Services.

But many said they support the move. “It’s a good idea because a lot of movement in the market is attributed to program trading that isn’t,” said Robert Gordon, president of Twenty-First Securities Corp. He hopes the rule will dispel some concern over program trading activity.

Analysts agree a separate possibility under consideration that would require members to identify within 48 hours all customers for whom any business was conducted has far more serious implications.

“That proposal will come up against a great deal of resistance,” Long said.