The New York Stock Exchange won its biggest share of U.S. equity volume in almost four years amid changes to the Standard & Poor’s 500 Index and Dow Jones Industrial Average as well as the expiration of derivatives.
NYSE Euronext’s market captured 23 percent of volume yesterday, the most since reaching 25 percent on Dec. 18, 2009, and topping the peak of 22 percent set a year ago, according to data compiled by Bloomberg.
While total U.S. volume of 9.1 billion shares was only the highest in less than three months, the Big Board benefited disproportionately from the quarterly reweighting of the S&P 500, three Dow membership changes, and the expiration of options and futures. Mutual funds that mimic the S&P 500 and Dow tend to shift orders to the NYSE during index changes to participate in the exchange’s end-of-day auction, which sets closing prices for some of the world’s biggest companies.
Goldman Sachs Group Inc., Visa Inc. and Nike Inc.’s entrance to the Dow took effect after the close yesterday, the biggest adjustment to the 30-company measure since 2004. The NYSE is the listing venue for all three stocks.
No U.S. exchange operators reported technical problems yesterday amid the increase in volume. Recent exchange breakdowns, including Nasdaq OMX Group Inc.’s three-hour halt last month and NYSE Euronext’s inability to run closing auctions for some companies in November, have prompted regulators to press markets to collaborate on improving their infrastructure.
Both NYSE Euronext and Nasdaq OMX, which run the home markets for most U.S. companies, had both set up conference call lines yesterday for customers to discuss any potential issues.
“It was a big rebalance day; there was much made of that, and it was telegraphed by the markets pretty well,” Michael Cuggino, who manages $12 billion at Permanent Portfolio Family of Funds Inc. in San Francisco, said by phone yesterday. “Today was a non-event.”
NYSE’s dominance over markets has dwindled in the past decade as U.S. regulatory changes and improved technology prompted American equity trading to fragment across more than 50 venues. Combined daily market share for its three U.S. exchanges has averaged 23 percent in 2013, according to data compiled by Bloomberg.
Yesterday, the figure jumped to 32 percent, topping the 31.5 percent share of trading at dark pools and other off-exchange venues, the data show. It was the first time since Sept. 21, 2012, that NYSE Euronext beat the off-exchange total.
Executives from NYSE Euronext, Nasdaq OMX and Bats Global Markets Inc. met in Washington earlier this year with lawmakers and the SEC to discuss a rule that could divert more orders to exchanges rather than trading in dark pools or within a broker’s inventory. Dark pools, which don’t publish bids or offers on shares, were set up to allow large investors to trade big blocks without having news of their orders move the price.