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The merger between the NYSE and Archipelago is a truly great deal for both the NYSE and Archipelago. It brings together, under one virtual roof, one of the greatest pools of liquidity and one of the most aggressive forces for change in the equity trading business.

For the NYSE this deal is extremely important, but not from a traditional point of view. Our thoughts are the NYSE will not leverage ArcaEx to turn off the floor. I side with the NYSE on this. I don’t believe that this merger will hasten, slow, or radically alter the NYSE’s desire to move to a Hybrid Market Structure or to force the NYSE to jettison the floor and go fully electronic. NYSE already has a matching engine for electronically matching orders – Direct Plus. Direct Plus currently matches approximately 10% of the NYSE order flow. The reason they don’t move to a more electronic platform is not that they can’t; it’s because they believe it to be in the benefit of the auction model.

NYSE firmly believes, whether correctly or not, that the auction process and the interaction between the floor brokers and the specialists add value for investors. Investors while complaining bitterly over the specialist system have not overtly challenged this notion as ArcaEX, INet, Bloomberg’s TradeBook and others have tired with little success to make inroads into listed flow, and have not dramatically altered the NYSE market share....

What The NYSE Buys What the NYSE buys from the Archipelago merger is a new ......................

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