TRADING: NYSE starts last phase of hybrid market

NEW YORK — New York Stock Exchange started the fourth and last phase of its hybrid market platform Jan. 25, while the SEC postponed the launch of its Regulation NMS reform to accommodate the world's largest equity market.

The new NYSE hybrid market includes order auto-execution on the NYSE Direct+ platform and also allows floor specialists to interact with its electronic book.

"In Phase IV, the NYSE will introduce immediate-or-cancel and intermarket sweep orders that will not route (orders)," according to an NYSE statement circulated to brokers' compliance departments.

Simultaneously, the SEC is postponing the implementation of two major Reg NMS rules to March 5 from Feb. 5. The rules require that exchanges provide fair access to quotes and that trading centers prevent order execution at a price inferior to the best electronic quote displayed on another trading center.

The SEC had previously amended the start date of a market data sharing plan among the U.S. exchanges to April 1.

The SEC was responding to the NYSE's Jan. 8 request for a delay because "implementing Regulation NMS without full participation by a major market such as the NYSE would jeopardize the smooth functioning of the U.S. equity markets," according to a statement from the agency.

The rollout of stocks compliant with Reg NMS will start on July 9 and should be completed by Oct. 8.

As a result of the new Reg NMS schedule, the Chicago Board Options Exchange is pushing back the launch of the CBOE Stock Exchange to March 5 from Feb. 5.

NEW YORK — Liquidnet is buying agency brokerage firm Miletus Trading, which provides quantitative execution strategies and analytics to institutional investors. Terms were not disclosed; The deal is expected to close in March, pending regulatory approval. Putnam Lovell NBF Securities served as financial adviser to Miletus, while agency crossing network Liquidnet did not have an adviser.

The acquisition will allow Liquidnet to "introduce the next-generation institutional trading model," Liquidnet CEO Seth Merrin said in an interview.

He declined to elaborate on the trading model or new products that the two firms would develop.

Michael Capelli, Miletus co-founder and managing director, said his firm's "underlying analytics are driving the strategies that makes Miletus unique vs. its competitors."

He expected Liquidnet to fully leverage Miletus' technology, which would allow institutional investors to better use Liquidnet's access to 2 billion shares a day plus another 1.5 billion shares in Liquidnet's H2O initiative with streaming partners from the brokerage side.

BOSTON — State Street Corp. will acquire Currenex Inc., an online foreign-exchange trading platform, for about $564 million in cash, said Scott D. Schubert, managing director with Putnam Lovell NBF, which advised State Street on the acquisition.

The deal is expected to close before March 31. Mr. Schubert said Currenex's high-speed trading technology — in demand with fast-growing client segments such as hedge funds — should greatly complement State Street's existing FX Connect trading platform, which boasts a commanding share of the currency trading market for traditional investment managers.

Currenex spokesman Richard A. Wright referred questions to State Street. State Street spokeswoman Hannah Grove wasn't immediately available for comment.