NEW YORK, June 17, 2004 - Dow Jones Indexes today announced that its pilot program to use American Stock Exchange pricing for opening and closing values of Nasdaq stocks in the Dow Jones Averages will run from July 1 to Dec. 31.
"This period was selected to allow for a variety of market conditions in which to experience and explore this alternative pricing capability," said Michael A. Petronella, president of Dow Jones Indexes/Ventures. "Among other things, these six months will include several expirations of futures and options contracts based on the Dow Jones Industrial Average, as well as end-of-year portfolio realignments. These predictable events, as well as unpredictable currents and trends in the market, assure us of a more rigorous examination than likely would have been achievable in one to two months."
During the pilot program, the Dow Jones Industrial and Transportation Averages will be calculated with American Stock Exchange prices only at the opening and the close. During the trading day, prices will be taken from these stocks' primary market, which is Nasdaq.
Mr. Petronella said that the pilot program is being implemented in response to investment professionals' complaints about not being able to cleanly execute orders designated "on the open" and "on the close" in the Nasdaq trading system. Nasdaq has instituted a "closing-cross" process in its all-electronic system but hasn't implemented a similar process for the opening.
"Our pilot program will enable comparison of pricing originating from the standard Nasdaq system on the opening, the new ‘closing-cross’ process at the close and from Amex floor specialists at both of these important points in the trading day," Mr. Petronella said.
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