What are the four types of members of the New York Stock Exchange, or NYSE?

Expert Solution

Four Types of Members of the NYSE in general and the NYSE Equity Market in Particular are:

- Designated Market Maker

- Trading Floor Brokers

- Supplemental Liquidity Providers

- Retail Liquidity Providers

Designated Market Makers combine physical auctions with automated acutions through algorithmic quotes from other market participants, provide liquidity by guaranteeing sale/purchase of fixed number of shares of a fixed company(s), exist under rules created by security exchange regulators and ensure smooth operations of the NYSE.

Trading Floor Brokers (TFB) act as agent for large inistitutional clients, designated market makers (other than principal account traders) and other large investors. The TFB's task is to execute each individual buy/sale order at the best possible price though a process of competitive bidding against other brokers/traders.

Supplemental Liquidity Providers (SLPs) are high volume trading members who add liquidity to the exchange only through their designated proprietary accounts by maintaining bid/offer(s) around the National Best Bid/Offer (NBBO) for at least 10% of the trading duration.

Retail Liquidity Providers (RLP) function under NYSE's RLP program which aims at maintaining a liquid market for retail investors, firms and other small ticket investors through market making and/or underwriting of small trading volumes in specific securities.

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