The NYSE has proposed a 12-month pilot program to create a bond trading license for member organizations that desire to trade only debt securities on the Exchange, and to establish a new class of NYSE market participants.  Toward this end, the NYSE would: (I) adopt new Rule 87 to create a new bond trading license;  and, (ii) adopt new Rule 88 to establish a new class of debt market participants - "Bond Liquidity Providers" or "BLPs" - and provide them with financial incentives for bringing liquidity to the NYSE'S bond market.

    Background on the Current NYSE Bond Trading Platform.   The Exchange began trading bonds electronically in 1977 with the introduction of the Automated Bond System (“ABS”).  In 2007, the ABS
system retired and the NYSE moved the bond trading platform to its Archipelago technology.  It also replaced former Rule 86 (“Automated Bond System”) with new Rule 86 (“NYSE Bonds”), and filed Rules 1400 and 1401 to expand the number of debt issues that could be traded on the exchange.  Bonds eligible to trade on the NYSE Bonds platform include any debt instrument that's listed on the NYSE and any corporate debt of a NYSE-listed company.  

The NYSE Bonds platform never took off, executing between 0 and 20 trades per day, with an average sized trade of 20 bonds. The Exchange believes that with incentives under the proposed pilot, the trading platform will attract providers, that in turn would create more liquidity and transparency in the retail corporate bond market.

For those interested in learning more about the Bond Trading Licenses, and other aspects of the rule propoosals, click onto:   [NYSE Rule Filing 10-74, 11/23]