By the end of 2017, the New York Stock Exchange (NYSE) will open up its trading floor to all U.S. securities. Currently, NYSE restricts securities trading on the floor to the top 3,166 stocks, according to a Reuters report.
The change means that, now, up to 8,600 securities can be traded by floor brokers.
So, how does this change meet with the rising popularity of electronic trading and what does this change mean for investors?
Equitable Securities Trading Over Efficient Securities Trading
The NYSE’s decision to expand floor trading comes in contrast to most securities brokerage firms decision to opt for electronic trading. Electronic trading’s automated exchanges make it an efficient means of trading. Through electronic trading, stocks and securities are distributed on a first-come-first-serve basis.
Despite electronic trading’s popularity for providing fast trading solutions, it is not without its downsides. Critics say electronic trading creates an uneven playing field for investors. Beginning investors or ones with less access to electronic trading technology are out-paced by high-powered firms.
Accessibility for Investors
NYSE executives state their hopes to establish their trading floor as an accessible and equitable marketplace to trade and invest.
In addition to the wider selection of securities available to investors, NYSE executives hope that expanded floor trading will reintroduce transparency into securities trading. While speed and efficiency are important components, sole reliance on those factors mean an increased risk of fraud.
Conversely, investors must also be aware of risks associated with the increase in floor trading availability. Investors always need to make sure of performing due diligence before closing on any trade.
A Resource for Investors
Savage Villoch Law is here for our clients. If you have more questions on what this change means for securities trading or general investing questions, contact our expert team today and we will make it our goal to get answers for you.