Is it time to pronounce the efforts of NYSE Euronext to move past its vaunted specialist system a resounding success?

Many would agree. Back in 2008, the exchange company took some radical steps to transition away from specialists and move toward so-called designated market makers (DMMs), who were set up much more like Nasdaq dealers.  The twist was that unlike the Nasdaq dealers, the DMMs were required to have a presence on the floor of the New York Stock Exchange, reversing the notion that the floor was merely a tourist attraction, marketing venue and for-rent event space.

As 2012 gets underway, the new DMM system seems to be riding high. Traders magazine notes the floor is thriving, as the likes of trading powerhouse Getco embrace the DMM business. Recall that Getco, a high-frequency trading firm, bought the floor operations of Bank of America Merrill Lynch. Other big players include Barclays, Goldman Sachs and Knight. In addition, Virtu Financial has purchased a market-making unit from Cohen Capital and is set to enter the DMM business.

It’s fair to say that high-touch trading has not been eclipsed by electronic trading. Human traders still figure in the trading plans for many big outfits. Obviously, a firm cannot make a business solely off of DMM operations. But the big, diversified brokers want to have all their bases covered, and that includes a DMM component. Truth be told, DMMs could ply their trade electronically from a remote location. But the NYSE Euronext obviously sees value in maintaining a physical presence.

For more:
- here’s the article

Related articles:
EU holds fate of NYSE Euronext-Deutsche Bourse deal
NYSE Euronext pricing proposal sparks debate