TY - JOUR T1 - Algorithmic/Electronic Trading and Reg NMS JF - Trading SP - 61 LP - 63 VL - 2006 IS - 1 AU - David Easthope Y1 - 2006/03/20 UR - http://guides.pm-research.com/content/2006/1/61.abstract N2 - The US equity market has undergone radical changes in the last 10 years, evolving from a traditional floor-based model dominated by the NYSE and smaller regional exchanges to a highly fractured trading environment supported by voice and electronic exchanges and a host of ECNs and ATSs. The increased use of electronic trading, however, helped expose a number of structural deficiencies in the US markets. Created in the 1970s, the National Market System could not—in a fair and efficient manner—support the kind of trading activities made possible by 30 years of technological innovation. In response, the SEC introduced Regulation NMS (“Reg NMS”), a set of sweeping market reforms intended to modernize US regulatory market structure. Although the immediate impact of Reg NMS has been well documented (see: NYSE/Arca and Nasdaq/Inet), the long-term impact on ECNs as a whole is less clear. On its face, Reg NMS appears to favor ECNs due to its emphasis on the automation of trading. Thus, we expect ECNs to make continued gains against the specialists. However, the greatest overall impact of Reg NMS will be on the NYSE by forcing it to adopt the electronic model in its recently outlined hybrid structure. ER -