WS&T: Will the Amex be a fast market under Reg NMS?

Shagoury: Yes. By definition, we are positioning ourselves to be a fast market or an automated market.

WS&T: What are the characteristics of the hybrid market platform that make it compliant with Reg NMS?

Shagoury: It's a system providing immediate accessibility, immediate interaction, and execution with quotes and orders. It is providing the automated market interaction, which I think is the underpinning of what we're doing and what we're moving into under NMS. That's at the root of the naming of the system as well - based on automated market interaction, we coined [the name] Auction Electronic Market Interaction to give people a better understanding of what we want to do. I'm not trying to over simplify what the system is doing, but, in essence, that's what it is - it's providing the transparency and the immediacy of access into our marketplace. We are providing executions well under a second. We are immediately providing access to our quotes - our Amex best bid and offer. We are providing immediacy of routing of orders in which the Amex has away-market obligations. I think that one piece of the system is the most ECN-like.

WS&T: How does the automated execution component interact with the specialists?

Shagoury: Today, the specialist is central to the process here. We've automated and we've taken away a lot of the manual interaction with the executions that are executable [automatically]. If I have a legitimate quote, and I have an incoming order that's hitting that quote, why should anybody be involved in that interaction? That's immediate execution; that's happening within the system. That is the automated process. There are things in which there should be manual intervention - complex trades and imbalances and things of that nature - and there are things that shouldn't be. If I have orders resident in the book, and if I have natural contras coming into the exchange, there should be no one in between that process.

WS&T: How will this make the Amex more competitive in the future?

Shagoury: It's really about price - it's about performance and it's about cost. What choice am I providing the community? Price is a very strong component of that. How do I show that I'm cost-effective? That's a huge differentiator. And how can I go out and hit that performance piece so if people want that immediacy, they can have it?

If I have a hedge fund come in, they want fast interaction with the market. You say fast money, and in a risk-managed situation, you want to provide that. You don't want to have [the fund] say, "I'm not sending an order to the Amex," because the fund can't afford the risk of executing in that forum. And choice [relates to] if we have an offering in which we can support the less-liquid, the more-complex trades. That's the value that we offer.

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