Why Is NYSE Selling? It’s A Matter Of Pennies


NEW YORK (AP) – While executives were finishing a deal to sell the New York Stock Exchange to a German rival, the NYSE was locked in a separate, smaller battle with three dozen competitors. The prize was the right to deliver shares of Coca-Cola stock to an investor who wanted 400 of them.

About 8 billion shares trade every day in the United States, so this sale seems hardly worth mentioning, save for the telling outcome: The NYSE lost.

The New York exchange is losing a lot these days. The icon of American capitalism hopes that combining with another exchange will give it heft to reverse its fallen fortunes. But it won’t be easy.

Competition is so keen to handle stock orders now that the difference between winning and losing frequently comes down to pennies – in the case of the Coke trade, a few hundredths of a penny.

For decades, if you wanted to buy Coke stock, your request went to a middleman in a trader’s jacket standing on the floor of the NYSE building in lower Manhattan – the shot seen over and over on television when the market has a big day. He would yell and wave his arms until he found someone willing to sell.

Now those middlemen are nearly all gone, replaced by the hum of computers in office parks across the country.

Such was the case Monday, when Lime Brokerage in Manhattan placed an order to buy 400 shares of Coke at the request of The Associated Press. At 11:29 a.m., Johan Sandblom, a Lime trader, moved his computer cursor to a “Buy” icon on his screen and clicked.

In 150 millionths of a second, the order traveled two and a half miles to a white stone building across the Hudson River in Jersey City, N.J. The destination: a $7,000 computer server no bigger than a DVD player that can juggle buy and sell orders for more than a million shares every second.

A few hundredths of a second after the Coke request arrived, the server got offers from three dozen exchanges and other trading venues looking to sell shares. One was headquartered in Lenexa, Kan., another…

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