New York: The Nasdaq Stock Market (www.nasdaq.com) has announced that it has expanded the list of securities eligible to trade on the Primex Auction System to include all components of the Nasdaq-100 Index. Participants in Primex, Nasdaq's new electronic auction facility, can now trade a total of 194 securities, including many of the market's most heavily-traded issues.
Nasdaq began operation of the Primex Auction System on 17 December 2001, with trading limited to the 30 stocks of the Dow Jones Industrial Average. On 7 January 2002, Nasdaq added the stocks in the Standard & Poor's 100 Index.
"As Nasdaq adds more securities eligible to trade in Primex, we expect that more Nasdaq traders will take advantage of the unique benefits that the system offers," says Nasdaq Stock Market senior vice-president Gene Lopez.
Says Primex Trading NA, LLC, CEO Glen Shipway: "Primex's progress so far shows that it's possible to efficiently conduct an electronic auction of stocks. As we continue to add securities, more and more in the industry will see the value of our system's automated exposure process."
Trading volume in Primex has increased steadily along with the list of tradeable securities. During the past two weeks, participants executed more than 18,000 trades and 5 million shares daily, on average. This compares favourably with the first three weeks of the system's operation, when participants executed averages of more than 8,000 trades and 2 million shares daily.
The current securities list will remain in effect through 31 March 2002, when the initial start-up phase is scheduled to end. Nasdaq has waived all fees associated with linking to, and transacting in, Primex for the duration of the initial start-up phase. Nasdaq has an exclusive license to operate Primex for all US equities. This new, hybrid, auction/dealer-trading system was developed by Primex Trading NA, LLC (www.primextrading.com).
Primex is a relatively simple and easy way for Nasdaq participants to access liquidity that, until now, has never been exposed to the marketplace. There are two sides to the Primex Auction. On one side are order entrants, including market makers, who briefly expose their orders in the system. On the other side, a crowd of electronically-linked participants competes for these orders at prices at, and within, the prevailing national best bid or offer (NBBO).
To speed the auction process, participants in the crowd typically will predefine their responses using the system's unique predefined relative indication (PRI) tool. These responses reside in the system undisclosed. When orders are exposed in the system, PRIs respond to them immediately.
Market makers that enter their customer orders in the system may continue to commit capital to those orders, in conjunction with the auction process. The system's exposure mechanism validates customers' execution prices and enhances execution quality without sacrificing speed. So far, more than 60 broker/dealers have registered as Primex Auction System participants.
About Primex Trading NA, LLC
The Primex Auction is the creation of Primex Trading NA, LLC, a partnership formed by securities industry brokerage firms and investment banks, including Salomon Smith Barney, Morgan Stanley, Merrill Lynch, Goldman Sachs, and Bernard L Madoff Investment Securities. The New York-based Primex Trading NA, LLC, conceives, designs, and licenses trading solutions for the securities industry.