-Annual
`
`Report
`
`1983
`
`IBG 1077
`
`IBG V. TT
`
`CBM2016-00054
`
`IBG 1077
`IBG v. TT
`CBM2016-00054
`
`

`

`53%
`
`financial Operands
`
`New Equity Manners
`Adrnr‘tted in 19K!
`
`New Member Omar-ita-
`tions Admitted in 1983
`
`Comm Steers Listed
`
`in 1533
`
`NYSE Board of Durecrnrs
`
`NYSE Board Committees
`
`NYSE Cormrinees ol
`
`the Board
`
`Maison- Committees to
`
`the NYSE Board
`
`NYSE Officers
`
`NYl-‘E Board of Directors
`
`NYFCC Board of Dareclors
`
`NYFE Officers
`
`E E
`
`gtflfl
`
`cm
`
`1
`
`Srarlsfil and financial
`
`Highlighrs
`The View From
`
`11 Wall Street
`
`Chronology of Major
`Events: 19?5-¥983
`
`The Exdrange
`
`Martelplane in 1383
`
`The Cmperitive
`Environment
`
`New Premium
`
`'I'he Regulatory {Ilimalo
`
`1|]
`
`:2
`
`14
`
`IE
`
`1?
`
`Special Essay: Duality
`
`and Carmelitrm
`
`

`

`
`
`1933
`
`Statistical and
`
`Financial Highlights
`
`Reported Share Volume
`Daily Average Share Volume
`NYSE Composite lndex112/31)
`Bond Volume (Par Value)
`
`Revenues from Operations and Investments
`Expenses
`Income Before Taxes
`Provision for Income Taxes
`Net Income
`Members' Equity 112/311
`As of 12/31:
`
`21589576397
`85,334,296
`95.18
`7,572,315,000
`
`216,804,000
`179,251,000
`37,553,000
`20,260,000
`17,293,000
`134,878,000
`
`$
`
`$
`$
`$
`6
`$
`$
`
`539
`Member Organizations
`59
`Specialist Units
`407
`Individual Specialists
`1,550
`Total Listed Campanies
`1,518
`Listed Common Stocks
`
`As of 12731:
`Total Shares Listed
`
`45,1 17,958,326
`$1,504,155.24B,408
`
`
`42,360,000
`
`
`Total Number of Individual U.S.Shareownersimid-year1
`'MId-year 1901
`
`Aggregate Market Value of Shares Listed
`
`
`1975
`4,693,426,508
`18,551 .093
`47.64
`
`
`
`6969696969619en
`
`5.1 78,337,511)
`
`72,000,000
`04.000000
`0.000000
`4,200,000
`4,000,000
`
`57,400,000
`
`494
`57
`305
`
`
`22478032375
`$685,109.576,609
`
`25,270,000
`
`
`
`
`1932
`
`16,450,036760
`65,051 .529
`81 .03
`
`696969€fi696969
`
`7,1 55,443,011]
`
`168.98%“)
`153,063.01!)
`15,921,000
`7,168,111]
`0,753,111]
`1 17.58511!)
`
`617
`63
`405
`1 ,526
`1 ,499
`
`
`
`
`39.51 5,860,580
`31305355303562
`
`
`
`
`
`
`
`
`

`

`The View from 11 Wall
`
`Street
`
`1975. and both the Compos-
`
`the Exchange as an integral
`
`ite Quotation System and
`
`a new small—order delivery
`
`part ofour national economy
`had diminished.
`
`Over the past eight years, it
`
`system (DOT) were nearing
`
`Second, to strengthen the
`
`has been our good fortune to
`
`implementation. critics
`
`Exchange‘s role as a quasi-
`
`work together toward the
`
`complained about the
`
`goal ofmaking the New York
`
`Exchanges perceived reluc-
`
`Stock Exchange the highest-
`
`quality, most cost-effective
`
`tance to adapt technology
`to the needs ofa modem
`
`marketplace in the secu-
`
`securities marketplace.
`
`rities industry. Now, as we
`
`lll-wishers predicted that
`
`public. self-regulatory
`institution committed to
`
`serving and protecting the
`
`legitimate interests of all
`
`users of its marketplace.
`And third, to maximize,
`
`prepare for an orderly trans-
`
`fer of leadership. it seems
`
`the abolition of fixed public
`commission rates—which
`
`appropriate to examine how
`
`also took effect in 1975—
`
`through modem technology
`
`and even-handed applica-
`tion of fair and effective
`
`this institution has changed
`
`since 1975—the gloomiest of
`
`watershed years for the
`
`Exchange and the industry.
`
`would create a competitive.
`environment in which the
`
`rules. policies and proce-
`dures. the efficient, cost-
`
`Exchange would be unable
`to survive. And even ifit
`
`elfeclive operation of the
`
`marketplace itself.
`
`Fundamental changes in the
`
`did manage to adjust to the
`
`For us, it has been a privi-
`
`governing structure of the
`
`anticipated economic up-
`
`lege to work toward those
`
`Exchange were adopted in
`
`heaval. they said. the Con-
`
`goals with the Exchanges
`
`1972. But the Exchange,
`
`gressional call fora National
`
`deeply committed, hard-
`
`in 1975, was still widely
`viewed as a relic of an
`
`earlier era, concerned
`
`Market System would soon
`
`working Board of Directors,
`
`make it obsolete anyway.
`
`with an increasingly dedi-
`
`An air of doom and gloom
`
`primarily with the economic
`interests ofits members.
`
`and govemment leaders,
`investors and academic
`
`economists had seriously
`eroded.
`
`pervaded the Exchange
`
`ship. with scores ofother
`
`cated Exchange member-
`
`lts prestige among corporate
`
`known and unpredictable
`
`Community. Fear of un-
`
`concerned and knowledge-
`able constituents, and with a
`
`economic and technological
`
`loyal. professional staff of
`
`challenges gripped much
`
`officers and employees.
`
`ofthe membership.
`
`we have come a long way
`
`The task of reaffirming
`
`since 1975. The Exchange
`faces the future with confi-
`
`Years of sparring with gov-
`
`the pre-eminence ofthe
`
`ernment regulators had
`
`New York Stock Exchange
`
`dence in its ability to meet
`
`fax if 1124». ,3.
`
`John J. Phi-Ian. Jr.
`President and
`
`Chief Operating Officer
`
`whatever challenges may
`lie ahead.
`
`Others will be the best
`
`judges of whether vigorous
`teamwork has reaffinned the
`
`dynamic relevance of one of
`
`W. M. Batten
`
`Chairman and
`
`Chief Executive Officer
`
`sapped much ofthe insti-
`
`among the world's securities
`
`tutions strength and vitality.
`
`markets posed a three-fold
`
`inevitably. nearly a decade
`ofdestructive criticism had
`
`challenge to the Board of
`Directors and senior
`
`weakened the Exchange’s
`confidence in its own eco-
`
`nomic relevance.
`
`Public ownership ofcorpo-
`
`rate equities had declined
`
`precipitously. reversing a
`
`generation of accelerating
`
`public participation in
`the market.
`
`Although the Consolidated
`
`Tape began operating in
`
`management:
`
`First, to change the percep-
`
`tions and regain the confi-
`dence of customers and
`
`America‘s great financial
`institutions.
`
`constituents whose faith in
`
`With the transfer of leader-
`
`ship just a few months away.
`
`we extend our sincere grati-
`
`tude to everyone who has
`
`helped, over the past
`
`eight years, to revitalize the
`
`New York Stock Exchange
`and to assure that it con-
`
`tinues to be the world's pre-
`
`mier securities marketplace.
`
`

`

`
`
`

`

`March: New NYSE small
`
`order delivery system—
`
`Designated Order Turtl-
`
`around System (DOT)—
`
`began operating on pilot
`basis.
`
`Board-level Quality of .Vlar-
`kets Committee. chaired by
`
`William M. Batten. estab-
`
`lished to oversee operation
`
`of NYSE. marketplace.
`Stock Allocation and Mar-
`
`ket Performance Commit-
`
`tees named in succeeding
`months.
`
`Alternate NYSE listing
`
`standards adopted to facili-
`
`tate listing of major foreign
`
`corporations.
`
`April: NYSE membership
`
`gave green light to merger of
`NYSE. Amex and NASD
`
`clearing operations.
`
`May: Changeover from fixed
`
`to competitive floor broker-
`
`age rates.
`W'illiam M. Batten suc-
`
`ceeded James J. Need ham
`as NYSE Chairman.
`
`June: NYSE adopted new
`
`stock allocation and spe-
`
`cialist performance criteria.
`December: NYSE admit-
`
`ted first foreign member.
`
`first foreign-owned member
`
`fimi. (Lepercq. de Neuflize
`& Co.)
`
`Chronology of Major
`Events: 1975-1983
`
`1975:
`
`1976:
`
`May: Fixed minimum com-
`mission rates on securities
`
`transactions abolished after
`
`183 years. SEC rule man-
`
`January: New NYSE
`
`high-speed line began trans-
`
`mitting market data at
`maximum of36.000charac-
`
`dated changeover to com-
`
`ters-per-minute. enabling
`
`petitive rates.
`
`interrogation devices to re-
`
`John J. Phelan. Jr.. elected
`
`main current during periods
`
`Vice Chairman of NYSE
`
`of tape delay.
`
`Board. succeeding Donald
`
`February: Board Com-
`
`T. Regan.
`
`June: Most sweeping secu-
`
`rities legislation in more
`than 40 years directed SEC
`
`mittee chaired by Public
`Director William M. Batten
`
`recommended major spe-
`
`cific improvements in
`
`to facilitate establishment of
`
`NYSE specialist system.
`
`a National Market System.
`
`Consolidated Tape began
`
`reporting transactions in all
`NYSE-listed stocks from
`
`seven market centers.
`
`SEC adopted uniform net
`
`capital rule, setting
`
`minimum capital require-
`
`ments for all categories of
`broker- dealers.
`
`August: New York levied
`
`one-year 25% surcharge on
`state stock transfer tax to
`
`help combat New York City
`financial crisis.
`
`October: SEC hearings on
`
`allegedly anticompetitive
`
`exchange off-board trading
`rules focused on NYSE
`
`Rule 394.
`
`December: 7th NYSE
`
`Survey of Shareowners
`
`recorded sharp reversal of
`
`[Wu-decade upward trend
`
`in individual ownership of
`common stocks and stock
`
`mutual funds.
`
`SEC ordered revision of
`
`Rule 394 to permit NYSE
`member firms to execute
`
`agency orders in NYSE-
`listed stocks in non-
`
`exchange markets provided
`
`limit orders on specialists
`book are satisfied.
`
`

`

`1977:
`
`1973:
`
`1979:
`
`January: Board voted to
`
`April: First 50-million-
`
`require all listed companies
`
`share (lay on NYSE
`
`January: NYSE published
`first in new series of eco«
`
`to have independent audit
`committees.
`
`(April 14).
`
`nomic studies. analyzing
`
`June: NYSE opened
`
`modern new participant-
`orienle'd Visitors Center
`
`“S began operating on
`
`key relationship between
`
`designed to enhance visitors-
`
`New category of member-
`
`pilot basis between NYSE
`
`productivity gains and eco-
`
`understanding of Exchange’s
`
`ship—competitive traders—
`
`and Philadelphia Stock
`
`nomic growth.
`
`role in US. private enter-
`
`establishcd to improve mar-
`
`ket liquidity and continuity.
`
`Exchange. Pacific. Boston,
`Midwest and American
`
`Pilot trading post installed
`
`on N YSE Floor as “working
`
`prise system.
`October: New volume
`
`February: Board repealed
`
`Stock Exchanges joined
`
`laboratory" for facilities
`
`rules barring foreign mem-
`
`bership on NYSE.
`March: Board rescinded
`
`restrictions on commu-
`
`nications between NYSE
`
`and other exchange trading
`floors.
`
`pilot during next three
`months.
`
`upgrade program.
`
`Exchange planning geared
`
`May: Registered Competi-
`tive Market-Maker (RCMM)
`
`-expanded Floor member
`classification:-established
`
`to achieving ability to
`
`productivity study exam-
`
`handle peak volume of up
`to 150 million shares in
`
`ined alternative strategies
`
`for promoting national
`
`a single day.
`
`economic growth.
`
`to supplement market-
`
`Public Affairs Program in-
`
`record—82 million shares
`
`traded on October 10.
`
`December: Second NYSE
`
`June: Exchange. at Con-
`
`making activities of NYSE
`
`augurated to develop ongo-
`
`gressional hearings. called
`for electronic. commu-
`
`specialists.
`
`June: Major NYSE Survey
`of Public Attitudes Toward
`
`ing dialogue among NYSE
`
`Community. government
`
`nications link among all
`
`and national opinion leaders
`
`market centers to strengthen
`
`Investing revealed deep
`
`on key economic and
`
`competition for and among
`
`orders in exchange-listed
`
`stocks as next step in de-
`
`public concern over infla-
`tion, reluctance to take
`investment risks.
`
`Exchange-related issues.
`
`March: NYSE Board ap-
`
`proved comprehensive plan
`
`veloping National Market
`
`August: Composite Quota-
`
`for establishing a new mar-
`
`System.
`
`July: Board initiated three
`
`new types of NYSE mem-
`
`bership-lessee. physical
`and electronic access—sub-
`
`sequently approved by SEC.
`NYSE Automated Bond
`
`tion System began reporting
`
`bid and asked quotes.
`with size. from all markets
`
`in which listed stocks are
`
`traded.
`
`ket for trading financial
`futures—the New York
`
`Futures Exchange (NYFEl-
`
`as wholly owned N YSE
`
`subsidiary.
`
`October: Board approved
`
`April: SEC proposed new
`
`comprehensive $12 million
`
`Rule l9c-3 to exertipt‘ stocks
`
`System became fully
`
`operational.
`
`plan to upgrade NYSE floor
`facilities and $8 million for
`
`August: SEC began hear-
`
`trading systems.
`
`ings on proposal to repeal
`
`December: NYSE began
`
`listed on exchanges after
`
`April 26. 1979 from ex-
`
`change off-board trading
`rules.
`
`exchange off-board trading
`rules.
`
`pilot-testing specialist limit
`order file.
`
`May: NYSE members
`ratified Constitutional
`
`Governor Carey signed
`
`legislation to phase out New
`York stock transfer tax.
`
`Plans announced for elec-
`
`tronic communications
`
`linkage among exchange
`
`trading floors toward creat-
`
`ing lntermarket Trading
`
`System (ITS) as key element
`
`of National Market System.
`
`Amendment permitting
`election of more than one
`
`Vice Chairman of the Board.
`
`Board elected Dean Witter
`
`Reynolds President
`Robert M. Gardiner as a
`
`Vice Chairman.
`
`NYSE Vice Chairman John
`
`J. Phclan. .lr.. named Chair-
`
`man and Chief Executive
`
`Officer of NYFE.
`
`

`

`1930:
`
`1981:
`
`1982:
`
`January: 1 billion shares
`traded for first time in
`
`October: Board authorized
`
`$3.5 million program to up-
`
`January: New volume rec-
`ord: 92. 7 million shares
`
`May: Trading began on
`NYFE in futures contracts
`
`a single month.
`
`grade Market Data System
`
`traded on January 7.
`
`March: Opening Auto-
`
`that processes last-sale data
`
`14th new electronic trading
`
`mated Report Service
`
`for Consolidated Tape and
`
`post installed on NYSE
`
`based on NYSE Composite
`Stock lndex.
`
`Start of SEC-ordered trad-
`
`(OARS) pilot program began
`
`automatically summarizing
`
`NYSE quotation data.
`November: The National
`
`buy and sell orders received
`
`Security Trading System
`
`on NYSE Floor before daily
`
`tNSTS)—Cincinnati Stock
`
`Exchanges automated
`execution service—became
`
`start of trading.
`
`Exchange, American Bar
`Association and American
`
`Law Institute co-sponsored
`National Conference on
`
`Corporate Governance and
`
`Accountability in Williams-
`
`burg, Va.
`
`April: Exchange, Harvard
`
`University. U. S. Senate
`Subcommittee on Interna-
`
`floor. completing first phase
`
`ing through experimental
`
`of facilities upgrade.
`
`linkage between [TS and
`
`NYSE survey estimated
`new total of 133 million
`
`indirect shareowners.
`
`NASD's Computer Assisted
`
`Execution System (CABS)
`in selected Rule l9c-3
`
`up from 120 million in 1975.
`
`stocks.
`
`seventh ITS participant.
`
`February: New lntennar-
`
`July: NYSE issued widely
`
`December: Eighth NYSE
`
`ket Surveillance Group met
`
`Survey of Shareownership
`showed that U.S. share-
`
`owner population re-
`bounded from 25,270,000
`
`individuals in 1975 to
`
`to coordinate exchange of
`
`market data. strengthen
`intermarket surveillance.
`
`NYSE economic study
`showed U.S. ranked sixth
`
`29,840,000 in mid-1980.
`
`in economic performance
`
`Year-End: Reported vol-
`
`among eight industrial na-
`tions between 1974 and
`
`echoed call for order expo-
`sure rule in connection with
`
`trading through experimen-
`
`tal lTS/CAES linkage.
`
`August: First lOO-million-
`
`share day in NYSE history
`“32.7 million shares-
`
`August 18) started pro-
`
`tional Trade co-sponsored
`
`conference on declining
`
`ume for a full year exceeded
`10 billion shares for the
`
`1980.
`
`first time.
`
`May: Board elected George
`L. Shinn, Chairman and
`
`CEO of First Boston Corpo-
`ration. to succeed Robert
`
`M. Gardiner us a Vice
`
`Chairman.
`
`July: First Japanese-owned
`firm—Nomura Securities ln-
`
`longed bull market.
`137.3 million shares traded
`
`—August 26.
`
`September: NYSE began
`
`pilot test of Registered
`
`Representative Rapid Re-
`
`sponse System (R4) oil'ering
`near-instantaneous execu-
`
`tion ofcustomers~ small-size
`
`market orders.
`
`U.S. competitiveness.
`
`May: Board extended
`Chairman William M.
`
`Batten’s contract to
`
`May 1984. elected John J.
`
`Phelan. Jr., to new post
`
`of President and ChiefOp-
`
`erating Officer. effective
`
`July 1.. and elected Donald
`Stone, Senior Partner of
`
`Lasker, Stone 8: Stem, to
`succeed Mr. Phelan as a
`
`Vice Chairman.
`
`July: First new automated
`
`trading post installed on
`
`Exchange trading floor.
`
`SEC adopted Rule 19c-3,
`
`withdrew 197;? proposal to
`end oH—board trading re-
`
`strictions in all exchange-
`listed stocks.
`
`August: Trading began in
`seven financial futures con-
`
`tracts in new NYFE mar-
`
`ketplace at 30 Broad Street.
`
`ternational. Inc.—admitted
`
`October: Exchange
`
`to membership.
`
`launched long-term pro-
`
`August: Plans announced
`
`gram to develop electronic
`
`for major enhancements to
`
`audit trail with ultimate goal
`
`DOT. ()ARS systems.
`
`ofautomatically capturing
`
`October: Board approved
`
`and recording details of
`
`new two-year. 812.5 million
`
`trading floor expansion
`program.
`
`every transaction to assist in
`market surveillance.
`
`147.1 million shares traded-
`
`December: Ninth Survey
`
`October 7.
`
`of Shareownership
`estimated new total of
`
`32.260.000 direct indi-
`
`vidual shareowners—
`
`7% increase in one year.
`
`Year-End: Exchange
`
`achieved. on schedule, sys-
`
`tems capacity to handle
`
`lStl-million—share peak
`
`days, sustained volume of
`80-90 million shares.
`
`(I
`
`

`

`1983:
`
`January: NYSE led mobili-
`
`June: NYSE and Harvard
`
`December: 10th NYSE
`
`zation of securities industry
`
`University's John F. Ken-
`
`Survey of Shareownership
`
`nedy School of Government
`
`documented sharp increase
`
`November: 149.4 million
`
`shares traded—November 4.
`
`New NYSE economic study
`examined how better man-
`
`agement of human resources
`
`to defeat proposed reimpo-
`sition of N.Y. Stock Transfer
`tax.
`
`can improve productivity
`
`March: NYSE urged SEC to
`
`growth.
`
`adopt proposed order expo-
`
`December: SEC post-
`
`sure rule in conjunction
`
`Steering Committee named
`
`poned second phase of
`
`with lTS/CAES experimen-
`
`to direct major new study of
`
`l'l'S/CAES linkage experi—
`
`tal linkage.
`
`ment, requested public
`
`April: New York City
`
`the NYSE's future operating
`
`environment. "Positioning
`
`comment on proposed order
`
`Administration dropped
`
`the Exchange for the 19805."
`
`exposure rule.
`
`Year-End: Reported vol-
`
`proposal to revive stock
`transfer tax from revised
`
`July: Pilot program intro-
`duced in one stock (PanA m)
`
`ume for year soared to 16.5
`
`budget.
`
`Top-level securities indus-
`
`to replace specialist's
`hand-written order book
`
`co-sponsored full-day semi-
`
`nar. at Harvard, on corpo-
`rate takeovers.
`
`Office ofthe Chairman
`
`in US. shareowner popu-
`lation— from 32,260,000
`
`in mid-1981 to 42,360,000
`in mid-1983.
`
`Board of Directors unani-
`
`mously endorsed nomina-
`tion of NYSE President John
`
`J. Phelan. .Ir., to succeed
`William M. Batten as
`
`Chairman and Chief Execu-
`
`tive Officer in May 1984.
`Year-End: 21.6 billion
`
`shares traded; 41 individual
`
`billion shares—nearly 40%
`above 1981 record.
`
`try. corporate. government.
`
`with electronic display.
`
`labor. academic leaders
`
`August: SEC deferred ac-
`
`days over 100 million; 31%
`increase over 1982 record;
`
`activer participated in
`
`ll/2-day Exchange-spon-
`
`sored Major lssues Confer-
`
`ence in Washington, D.C..
`
`tion on order exposure rule,
`asked for comments on
`
`82% increase in two years.
`360% increase over 1975.
`
`securities industry‘s experi-
`ence with Rule l9c-3.
`
`on Forging a National
`
`September: Trading in new
`
`Competitive Strategy.
`
`NYSE Index options set
`
`May: Board elected Merrill
`
`record for first-day trading
`
`Lynch Chairman and CEO
`
`in any index options product
`
`Roger E. Birk as an NYSE
`Vice Chairman to succeed
`
`George L. Shinn, who re-
`tired as Chairman and CEO
`
`in any market.
`
`October: NYSE formally
`
`urged SEC to either rescind
`
`Rule 190-3 or promptly
`
`of First Boston Corporation.
`
`adopt an appropriate order
`
`thereby becoming ineligible
`
`exposure rule.
`
`to continue serving on
`NYSE Board.
`
`Special Board Committee
`
`appointed to review NYSE-s
`
`organizational requirements
`
`in light ofexpected retire-
`ment ofChairman William
`
`M. Batten in May 1984.
`
`NYSE Composite index
`
`reached record high of
`99.63 on October 10.
`
`November: More than 700
`
`million new shares of com-
`
`mon stocks of seven regional
`
`telephone companies and
`
`nearly 900 million shares of
`“new” AT&Tto be formed in
`
`connection with January I,
`1984 divestiture of AT&T
`
`admitted to trading on
`
`"when-issued' basis; Spe-
`
`cialists in all telephone is-
`
`sues began using electronic
`
`limit order display books
`
`in connection with trading
`in those stocks.
`
`

`

`The extraordinarily important
`
`role this system has come
`
`to play in the Exchange market-
`
`place is underscored by the
`
`fact that Super-DOT orders now
`
`participate in about 58% of all
`NYSE transactions. Some
`
`40.008 market orders moved
`
`through the system on an
`
`Moreover, frequent selective
`use of the 'active stock" feature
`
`that allows market orders in
`
`low Vole. laconi-
`rill lulu ll mum
`to flip "but III-l
`broker-I monitor m
`and [um lulu
`ill- the Flu! boil-
`.r Ill' ll Spring 1884.
`
`
`
`The Exchange Marketplace
`in 1983
`
`The late-1982 bull market
`
`Reported share volume
`
`increased, for the sixth
`
`consecutive year, to nearly
`21.6 billion shares- a 31%
`
`roared into the new year and
`
`gain over the 1982
`
`kept going at full speed.
`
`record. Daily volume
`
`smashing records right and left
`
`and making 1983 the most
`
`averaged more
`than 85.3 mil-
`
`active and most successful year
`
`in Exchange history.
`
`lion shares—compared with 65
`million in 1982-and exceeded
`
`Stock prices rose substantially
`
`100 million shares on 41 individ-
`
`Current Exchange planning is
`
`geared to developing the capac-
`
`average 85-million-share day
`in 1983.
`
`during most of the year. The
`
`ual days.
`
`ity to handle peak volume
`
`NYSE Composite Stock Index
`
`Significantly, on the least active
`
`loads of upto 258 million shares
`
`soared from 81.03 at year-end
`
`1982 to an all-time high of
`
`99.63 on October 1081, before
`
`settling back to 95.18 at year-
`
`end. Other closely watched
`
`day in 1983—August 29-just
`over 53 million shares traded.
`
`a day by late 1984.
`
`The many-faceted program now
`
`a particular issue to be grouped
`
`more than on any single day be-
`
`undewvay stresses the use of
`
`together and printed out as a
`
`fore 1978 and considerably more
`
`electronic trading support sys-
`
`“bunched” order was a key fac-
`
`than the daily average volume
`
`tems up to and away from the
`
`tor enabling Super-DOT to
`
`market indices also registered
`
`for any full year prior to 1982.
`
`successive new highs during
`
`much of the year.
`
`(The single-day volume record-
`149.4 million shares on Novem-
`
`point of trade. while preserving
`the Crucial element of human
`
`handle as many as 70,000 indi-
`vidual market orders without
`
`judgment on behalf of the cus-
`
`ber 4, 1982-remained intaCt
`
`tomer at the point of trade.
`
`throughout 1983. but it. too.
`
`toppled on the third business
`
`Trading Support Systems
`
`day of the new year. Trading
`
`stress on high-volume days.
`Other enhancements have
`
`greatly speeded the delivery of
`
`Super-DOT execution reports
`to member firms. While the
`
`All-II Vol-lo: 1915-1”
`talcum of Shim]
`
`
`
`The essential trading support
`
`broke through the 150-million-
`share barrier for the first time on
`
`systems underlying the ability of
`
`system now guarantees that all
`
`the Exchange marketplace to
`
`such reports will be delivered
`
`January 5, 1984, when just un-
`
`handle unprecedented volume
`
`within five minutes. 95% of the
`
`der160 million shares changed
`
`hands. January 1984 also
`became the first month in
`
`in 1983 are designed to operate
`within the framework of
`
`market orders flowing through
`
`Super-DOT during 1983 were
`
`Exchange auction market trad-
`
`executed and reported back
`
`history when average daily vol-
`
`ing. Four of the key systems
`
`ume on the Exchange exceeded
`100 million shares.)
`
`employ sophisticated technol-
`
`ogy that enables member firms
`
`Exchange people, systems
`
`to send orders directly from
`
`to the originating member firms
`within two minutes, and aver-
`
`age turnaround time was
`85 seconds.
`
`and facilities proved more than
`
`their offices to the trading posts
`
`DAHS (Opening Automated
`
`equal to the challenge of han-
`
`on the Exchange floor. All of
`
`Report Service):
`
`dling the unprecedented volume
`loads without undue stress-
`
`these systems are scheduled for
`
`Using the same electronic cir-
`
`further upgrading as part of the
`
`cuit as the Super-DOT system.
`
`even as management accel-
`
`Exchange's ongoing program
`
`OARS has greatly improved
`
`erated the Exchange's capacity
`
`to bring all trading suppon sys
`
`the speed, efficiency and cost-
`
`planning to meet still greater
`
`tems up to the 250-million-
`
`demands for high-quality
`
`share capacity level before
`
`service in the mad<etplace.
`
`year-end 1984.
`
`Throughout the sustained
`
`Super-DOT:
`
`effectiveness of handling
`smaller orders at what is nor-
`
`mally the busiest time of the
`
`trading day-at the market
`
`periods of heavy market activity,
`
`Operating at electronic speeds.
`
`opening when, typically15-20%
`
`market professionals and inves-
`
`the enhanced DOT system—now
`
`of daily order flow reaches the
`
`t0rs across the country were
`
`known as Super-DOT—enables
`
`Exchange trading floor.
`
`able to obtain pricing and trans-
`action information on a real-
`
`well over 100 participating
`member firm subscribers to
`
`time basis. via high-speed
`
`transmit market orders of up to
`
`electronic data-processing lines
`
`599 shares in any listed stock
`
`and data-inquiry terminals.
`
`8
`
`to the post at which the stock
`is traded.
`
`

`

`BARS electr0ricallv accepts.
`stores and tabulates market or<
`
`tiers of up to 5,099 snares in any
`listed Stock that member firms
`
`send to the Exchange before the
`
`screers Operating of? the Limit
`
`expressly for the Exchange will
`
`Quotation Spread-Tne
`
`Order System, it is designed to
`
`be tested in early 1984 One will
`
`Exchange published 8 9 million
`
`improve the specialists speed
`
`fatilttate speoalists' reporting
`
`and efficiency c reporting limit
`Order executions DaCK to the
`
`by touch-screen operation
`We second will facilitate rrem
`
`quotations in 1983—9 5% more
`than in 1982-of which 20.0%
`
`had the minimum ‘r’apomt
`
`start of trading OARS calcu-
`
`menber r'irms
`
`her firm reporring by computer
`
`spread and 60 7% involved
`
`lates and prints out any intbal-
`
`In July, member firms began
`
`vo ce—recognition
`
`a spread of no more than
`
`ance between buy and sell
`
`routing day and good-til-
`
`orders in each stock, greatly
`
`cancellec limit orcers of up to
`
`Trade Comparison:
`Trades executed on :he Ex-
`
`'r‘a-point, compared With 22 6%
`
`and 651%, respectively, in 1982
`
`simplifying and speeding the
`
`99,999 shares in one pilot
`
`specialists task of establisning
`
`sleek—Pan Ant—directly to the
`
`charge floor must be compared
`—and the shares rrus: be deliver—
`
`Market Depth— Exchange
`
`computers measure market
`
`lair opening prices in his
`
`asSigned stocks
`
`After the specialist nas opened
`
`a Stock, a Sinple price entry
`
`initiates timer arc error-free
`
`execution reports back to the
`
`firms
`
`Limit Order System:
`
`The Limit Drcer System elec-
`
`tronically processed an average
`
`
`
`Electronic Display Ink. drained to n-
`nllee Ipecilliu's handwritten Iii-it little!
`book. il new undergoing upended pilot
`"all. on NYSE Floor,
`
`ed or paid for-by the fifth bUSi-
`ness day after the trade date
`
`depth as the price change per
`
`1,000 snares traded In 1983, the
`
`Following extenSIve develop-
`
`average stock showed no price
`
`mental tesong, two new auto-
`
`niated procedures aimed at
`
`change on 1,000 shares of
`volume 50 3th of the time. and
`
`bringing trade comparison
`
`either no price change or the
`
`closer to the point of sale‘use
`of omnibus broxer cames and
`
`minimum ‘x’a-pomt increase or
`oeCrease 86 2% of the time—
`
`direct electronic submissmn
`
`compared with 492% and
`
`of trace cata to the comparison
`
`85 2%, respectively, in 1982
`
`of 20,000 small and large lint»
`
`trading post where that stock
`ts traded
`
`ited price Orders curing ah aver-
`
`The success‘ul initial operation
`
`p'ocess—were implemented
`floorwide lr‘ 1983
`
`age BSmiIIicn-share day 11‘
`1983 It also maintains an over-
`
`of the Electronic Display Book,
`
`particularly during periods of ex-
`
`These programs and other trade
`comparison enhancements
`
`night file for some 60,000-
`
`tremely heavy Pan Am volume,
`
`were instrumental in reducing
`
`80,000 good-til-cancelled lGTCi
`limit orders
`
`prompted the Exchange to ex-
`pand the test to include AT&T
`
`:he uccompared rate from
`4 3‘59 in 1981 to 3 69': in 1982
`
`The system offers member
`
`firms a var ely of services. in-
`
`are the eight issues created by
`the A181 divestiture. II" which
`
`and 2 7% at year—end 1983
`
`cluding electronically generated
`execution reports ac auto-
`
`mated limi: order execut on
`
`monitor, and an electronic
`
`unusually heaw volJrne was
`
`correCtly anticipated, when they
`
`Market Quality and
`Performance
`
`began trading on a 'when
`issued" basis in November
`
`Exchange market profess-
`
`iocals maintained tight, liquid
`
`
`
`order-routing service that helps
`
`The Electronic Display Book
`
`lirms optimize their use 01
`
`will be enhanced during 1984,
`
`markets in listed stocxs despite
`
`record high levels of trading act-
`
`floor personnel, space and
`
`with the ultimate obiective of
`
`ivity and market volatility All
`
`equmem
`
`Electronic Display Book:
`The most recent additior to the
`
`expanding its use floorWide
`
`New Floor Technology:
`
`The Exchange is continuing to
`
`Exchanges growmg array of
`
`experiment With new leading‘
`
`elecnonic tracing suppon sys-
`
`ecge technology to mprove the
`
`tems, the Electronic Display
`Book, unoen/ver: ictenSive pilot
`
`irterface between people and
`
`machines on the trading floor
`
`three key measures of market
`
`duality-price continuity, quot-
`
`atior spread and market depth-
`
`Llfl to light: NYSE
`Direcm CPI!"
`Inoculation: Sui-II
`Alumni. Inc-tile
`VP-oeonu'em m
`reflecteo high standaros of Der-
`formance throughout 1983 P
`.
`.
`.
`,y,
`r
`,Jr..loben8.
`Price ContinUIty-BB 7‘-c of
`all trades in 1983 occurred
`
`testing during the second half
`of 1983
`
`In the Display 800k pilot, the
`
`spemalist's handwrizten limit
`
`order book is replaced by elec-
`
`tronically generated display
`
`Two new devices deSigned
`
`either a: the same price as the
`
`preceding trade or at the mint-
`
`rnurr DDSSIbie variation of
`
`'r'e-ooint-compared with 89.5%
`r 1982
`
`‘J'
`
`

`

`The Competitive
`Environment
`
`Most major corporations recog-
`
`21 7983 but no day was with-
`
`Smaller market and limit orders,
`
`n ze the multiple advantages of
`
`out precedent r the Exchanges
`
`and extended its electronic
`
`having their shares traced in
`
`19’2-year hlSlClv', as tracing
`
`iimit order display book pilo:
`
`Lixe any cngon‘g husiress :ne
`
`the world s premier securities
`
`began in the seven regional
`
`program to include the desrg-
`
`Exchange mast constantlv‘
`re-exan no its market and the
`
`marketplace. However, some eli-
`
`gible companies have declined
`
`telephone holding companies
`and the "new" ATM created bv
`
`lire of products : offers to cas-
`
`to list—some because they do
`
`the government-ordered re‘
`
`tomers in recent years. corpo-
`
`ro: wasn to pay the costs of
`
`structuring of the world's most
`
`nated specialists in all of the
`
`telephone stocxs FrOm the first
`
`day's opening bell, trading pro-
`ceeded smoothly, with "new"
`
`rate rrergers and acquisitions
`nave tended to reduce the
`
`total number of stocks listed for
`
`tracing on :he NYSE. are :0
`
`intenSify the neec for stronger
`efforts to attract new cem-
`
`if‘ltlal are continued listing, and
`
`others because they do not
`
`widelv held public corporation
`Mere than 1 5 bllion new snares
`
`and "old" ATStT leadirg the
`most-acnve-stock list-and the
`
`of common stock became
`
`regional holding companies not
`
`choose to treet the corporate
`
`performance, reporting and
`disclosure standards hat the
`
`Exchange in5ists upon as a
`
`paries :ha'. meet Excnange
`
`condition of listing
`
`standards are are eligioie ‘or
`
`Recent changes in NYSE list-
`
`listing
`In ‘983, more than ‘ 2 billion
`
`ing procedures now make it
`
`easie.r for privately neic cor-
`
`shares 0" 71 corporations were
`
`porations to have their shares
`
`1i5ted on the Exchange for tne
`first time—up froth 62 new
`
`listed or the Exchange on :ne
`
`same day that they go public—ah
`
`listings in 1982. despite
`
`opton exercised bv14 of the 71
`
`Sign ficant competition "om
`o:ner markezs
`
`companies that listed in 1983
`The AT&T Divestiture
`
`listed on the Exchange at any
`time before 1928
`
`71 min lived on Ilia NYSE lot II.
`lint line in an. 01‘ ISM Iii!“ «Inn-in.
`out In Ilillllly cot-pont- lllll in IYSE
`Vinita: caller Inhibit.
`
`far behind—during most of tne
`
`final days of 1983
`Market Share
`
`eligible for trading, on a "when-
`issuec' basis, in the NYSE
`
`The Exchange‘s portion of
`total volume in all listed stocks
`
`marketplace or‘ that day—more
`than the tota number of snares
`
`whim are traded in at least
`
`one other U S market averaged
`
`8512f}: in 1983, down slightly
`
`from 85 70% in 1982~but higher
`than the 84 90% recorded in
`
`In preparing for the szart of
`
`tracing, the Exchange orches-
`
`trated many months of detailed
`
`1975, the year of the demise of
`fixed commisSion rates
`
`cooperative planning With
`
`member organizations AT&T
`
`The Exchanges share of small
`order volume, however, has
`
`and the seven new holoing
`
`dropped Significantly over the
`
`corrpanies. the Securities
`Ind JSII’V Association, the
`
`past decade, reflecting both
`
`the implementation of the
`
`Securities lndustrv Automation
`
`lntermarket Trading System and
`
`Corporation, the DeposrtOry
`
`str0ng competition from the var-
`
`Trust Company, the National
`
`Securities Clearing Corporation,
`
`the banking community, the
`
`rous regional and over-the-
`Counter markets
`
`The loss of small-Order market
`
`major securities information
`vendors, the SEC, the U S Trea-
`
`share is Significant not so much
`because of the revenue loss to
`
`surv and the Federal Reserve
`
`the Exchange, but because
`
`With nearly every NYSE spel
`
`smaller orders play a very im-
`
`cialist firm competing for :he
`
`portant part both in the auction
`
`opportunity to handle the new
`
`market prrcrng mechanism and
`
`stocks, the Allocation Cornrnit-
`
`tee devoted speoal attent-on to
`
`the applicants" prospective
`
`capabilities fer c0mpetizively
`
`handling the antiopated heavy
`influx of orders
`
`The