NEW YORK (MarketWatch) — Introducing a new name to the shrinking pool of designated market makers on the New York Stock Exchange, Chicago-based e-commerce firm GETCO will take over 350 of the securities managed by Barclays Capital, announced the scholarship. Thusday.
GETCO has already begun the transition and will assume its market making responsibilities for all 350 securities in various sectors over the coming weeks. Financial terms of the purchase were not disclosed.
Barclays and the stock exchange have selected the shares that will migrate to GETCO – a shake-up made necessary after Barclays bought 119-year-old specialist firm LaBranche for $25 million last month. This acquisition added LaBranche’s 700 shares to the 900 NYSE-listed shares that Barclays had already accrued after taking over Bear Wagner Specialists and Lehman Bros. market making company.
“Our goal is to provide some diversity in titles between companies,” NYSE spokesman Ray Pellecchia said.
Designated Market Makers have specific responsibilities for buying and selling securities to mitigate imbalances in trading and are rewarded with incentives to increase market liquidity.
A decade ago there were 35 specialist companies on the New York Stock Exchange, but that number had fallen to four this month, with Bank of America, Kellogg Group and Goldman Sachs group unit Spear Leeds & Kellogg joining Barclays on the floor.
Although the role of specialists, now called designated market makers to reflect technological changes, has diminished somewhat with the rise of e-commerce, they are still among the most active traders on the NYSE. Designated market makers accounted for a total of 9% of NYSE trading volume in the fourth quarter of 2009, up from 4% in September 2008, according to the exchange.
The entry of GETCO multiplies the number by one and increases the visibility of the company. Previously, GETCO acted as a supplemental liquidity provider to the NYSE, trading electronically at the best bid and ask prices.
“GETCO becoming a Designated Market Maker for NSYE-listed issues and in our upcoming Nasdaq issues trading on the NSYE Amex platform clearly reflects a vote of confidence in the value of our market model to our communities. of issuers, investors and traders,” NYSE said Lawrence Leibowitz, chief executive of Euronext, in a statement.
During the transition period, Barclays will continue to manage all of its listed securities until GETCO is ready to take over this role.
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