Despite loud cries from some corners of the institutional investor world for the New York Stock Exchange to scrap its centuries-old specialist system, many institutions prefer a go-slow approach to any reform of the exchange's trading operation.
"I'm not in a hurry to see the New York Stock Exchange go away despite the fact that we all see problems in the system," said Gregory J. Rogers, a principal at Aronson + Johnson + Ortiz, Philadelphia. "I'd be hard-pressed to say all trading should be electronic."
Mr. Rogers said his firm, which manages about $7 billion, uses both on- and off-exchange trading platforms.
The issue of whether the NYSE should do away with its specialist system has been festering since the exchange announced earlier this year that its regulators were investigating five of the seven specialist firms for trading improprieties. Calls for reform grew this month, when exchange officials said they planned to bring disciplinary action against the five firms for trading ahead of customer orders and trading for the firm's account before trading for customers.
But whatever the outcome of the NYSE investigations, which are being closely watched and helped along by the Securities and Exchange Commission, some institutional investors are hoping to make sure the exchange's system is not taking advantage of them.
"To the extent someone can make a case for a better mousetrap, it should be entertained," said Gary W. Findlay, executive director of the $5 billion Missouri State Employees' Retirement System, Jefferson City. "The specialist system is very ingrained, but in some cases you have to question its value."
He said he would like to see the exchange at least offer both types of trading — through the specialists or electronically.