NYSE’s Proposed Hybrid System - DIRECT+

The New York Stock Exchange ("NYSE" or the "Exchange") has submitted a rule filing (the "Filing") to the SEC relating to proposed modifications to its automatic execution system, NYSE DIRECT+

® ("Direct+"), which the SEC has published for public comment. SEC Release No. 34-50173 (Aug. 10, 2004), 69 FR 50407 (Aug. 16, 2004). Comments are due by September 7, 2004, but we have been advised that this deadline will be extended by two weeks at the Exchange’s request. The proposed changes to Direct+ are intended to create a "hybrid" market that will make "speed and execution certainty available to a wider variety of orders" and "provide an opportunity for price improvement [in an auction market environment] for those who desire it." 69 FR 50407, at 50413. If implemented, the changes will significantly alter NYSE’s existing auction market structure. The NYSE’s hybrid market proposal comes at a time when the SEC is encouraging exchanges to operate "fast" markets in its proposed Regulation NMS.