The New York Stock Exchange (NYSE) has unveiled a key strategy for maintaining trading stability during periods of high market volatility by combining cutting-edge technology with human judgment. This approach involves assigning a dedicated manager to each stock, enabling decisions based on state-of-the-art technology, while also implementing safety mechanisms at the individual stock level to curb sharp price fluctuations.
On Monday, NYSE President Lynn Martin emphasized the importance of robust institutional frameworks and protective measures in distinguishing markets that maintain investor trust. She spoke at a seminar titled, Strategies for Advancing Korea’s Capital Market and Enhancing Global Competitiveness, hosted by Democratic Party lawmaker Kim Nam-joon at the National Assembly in Seoul.
Martin highlighted that the NYSE’s core approach to market stability lies in the seamless integration of technology and human judgment. She explained how the NYSE bolsters market resilience by combining electronic trading systems, designated market makers (DMMs), and circuit breakers.
The NYSE president showcased the exchange’s integrated trading platform, known as the Pillar system. Pillar consistently operates reliably, even during periods of high market volatility and activity, Martin stated. She emphasized the critical importance of a market’s capacity to handle volatile trades and large transaction volumes.
However, Martin stressed that technology alone is not sufficient. It assigns a designated market maker (DMM) to every stock listed on the NYSE, she explained.
By merging the advantages of technology with human judgment, it delivers superior single-price trading at market open and close, and provide tighter bid-ask spreads throughout the trading day, Martin elaborated. She noted that this approach has resulted in a 40% decrease in volatility and a 60% narrowing of spreads.
Martin expressed her belief that creating opportunities for the highest level of technology and human judgment to interact leads to a significantly smoother and less volatile trading environment.
The NYSE president also discussed circuit breakers as a crucial safety mechanism to limit drastic price fluctuations. While similar systems exist in other markets, including Korea’s, the U.S. version applies at the individual stock level, unlike Korea’s index-level activation. This allows for temporary trading halts in cases of extreme volatility in specific stocks, helping to mitigate excessive market movements.
Martin then introduced plans to extend trading hours. It’s set to lead the industry by expanding the trading hours, she announced. Starting this December, the NYSE will transition to a five-day, 23-hour trading system, offering near round-the-clock market accessibility.
She commended Korea’s recent move to a 24-hour trading system for the won-dollar foreign exchange market, implemented on July 6. Martin noted that while the U.S. and Korean markets differ, both nations have modernized their systems to support extended trading hours, indicating similar preparatory processes.
Regarding the Korean capital market, Martin praised the tremendous amount of innovation in line with the digital era. She expressed the NYSE’s commitment to collaborating with Korean companies, facilitating their capital raising efforts both domestically and in the U.S. market as they grow and expand.