NYSE plus-tick issues with index arbitrage collars

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Imported from previous forum

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Does anybody how to send a “sell short on a plus-tick” order to the NYSE
now that the SEC has eliminated the short sale plus-tick test, as
discussed here:

http://finra.complinet.com/finra/display/display.html?rbid=1189&element_id=1159007243

The SEC is telling us to stop using the “sell short exempt” order,
since sell short orders are never subject to a plus-tick test any more.

But the NYSE has “trading collars” which restrict index-arbitrage
trades to selling on a plus tick when the NYA index has fallen
by a certain amount (currently 190 points). For more info, see
this recent press release:

http://www.nyse.com/press/1183113770739.html

So my question is: how does FIX allow us to send an order to sell short
on a plus tick now that the SEC has told us to stop using “sell short
exempt” orders, and a regular “sell short” order now does not imply
a plus-tick requirement? If we are selling long, we can mark our
orders as “sell plus”, but what do we do if it is a short sale?
It seems to me that FIX does not currently have any provision
for a “sell short plus” order. Or am I missing something?

Thanks,
Andy

3

Does anybody how to send a “sell short on a plus-tick” order to the NYSE
now that the SEC has eliminated the short sale plus-tick test, as
discussed here:

http://finra.complinet.com/finra/display/display.html?rbid=1189&element-
_id=1159007243

The SEC is telling us to stop using the “sell short exempt” order, since
sell short orders are never subject to a plus-tick test any more.

But the NYSE has “trading collars” which restrict index-arbitrage
trades to selling on a plus tick when the NYA index has fallen by a
certain amount (currently 190 points). For more info, see this recent
press release:

http://www.nyse.com/press/1183113770739.html

So my question is: how does FIX allow us to send an order to sell short
on a plus tick now that the SEC has told us to stop using “sell short
exempt” orders, and a regular “sell short” order now does not imply a
plus-tick requirement? If we are selling long, we can mark our orders as
“sell plus”, but what do we do if it is a short sale? It seems to me
that FIX does not currently have any provision for a “sell short plus”
order. Or am I missing something?

Thanks, Andy

Andy,

You are not missing anything.
As you said, in RegSHO stocks sell shorts are not subject to the tick test; and, as far as I know, currently NYSE does not support Side instruction to handle ‘Sell Short Plus’ to cover the situation you mentioned. Unless there is an enhancement already planned.

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So my question is: how does FIX allow us to send an order to sell
short on a plus tick now that the SEC has told us to stop using “sell
short exempt” orders, and a regular “sell short” order now does not
imply a plus-tick requirement? If we are selling long, we can mark our
orders as “sell plus”, but what do we do if it is a short sale? It
seems to me that FIX does not currently have any provision for a “sell
short plus” order. Or am I missing something?

You are not missing anything. As you said, in RegSHO stocks sell
shorts are not subject to the tick test; and, as far as I know,
currently NYSE does not support Side instruction to handle ‘Sell Short
Plus’ to cover the situation you mentioned. Unless there is an
enhancement already planned.

What we’re hearing from the NYSE is that we should mark such orders
as “sell plus” orders. In other words, the need for the plus-tick test
should outweigh the need to mark the orders short. Seems like either
way a rule is violated. I think the protocol needs to be enhanced
to support a “sell short plus” order. Or the NYSE could repeal
the 80A collars, but that seems unlikely. Seems like a pretty messy
situation.

Regards,
Andy