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Capital Markets

NYSE Arca To Limit Data Output For Quote Mitigation

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10/24/06

NYSE Arca plans to rely on limited quoting in inactive options issues to curb the flood of quote traffic that is expected to come from the penny options trading pilot next year. NYSE Arca plans to reduce the number of options quoting data by only sending messages on active options series to the data vendors and the Options Price Reporting Authority. Multi-listed options that haven't traded for two weeks and have no outstanding orders won't have quotes disseminated. The exchange will collect and retain the data for those options series so it would be available in case those series become active again. Based on internal studies, Arca has determined that it's possible to reduce quote traffic by 25-30% solely by limiting data to active options series, officials said. Other exchanges' quote mitigation strategies, including the Philadelphia Stock Exchange's and the International Securities Exchange's, rely more on monitoring market makers to make sure they are not sending too many quotes. The Chicago Board Options Exchange, the American Stock Exchange and the Boston Options Exchange have

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