What is a 'Hybrid Market'

A hybrid market is a securities exchange that facilitates trading through a blend of an automated electronic trading platform and a traditional floor broker system. Hybrid markets give brokers a choice between participating in the exchange through the traditional floor broker system, or the faster automated electronic exchange system.

BREAKING DOWN 'Hybrid Market'

A hybrid market uses both the traditional floor broker system and an automatic electronic trading system. Investors can choose the method by which they want to place their order. The key advantage to electronic trades is speed — they take less than one second to execute, while the average floor broker trade typically takes about nine seconds.

In January 2007, the New York Stock Exchange (NYSE) became the prominent example of a hybrid market. The NYSE, one of the world's oldest major exchanges, operated for years with its system of human brokers manually making trades on the trading floor. When electronic trades were introduced, it gave clients an option for execution. On January 24, 2007, the NYSE moved to allow almost all of its listed stocks to become available for electronic trading. These stocks can still be traded in the traditional method on the trading floor, but brokers also have the option of trading them electronically. Currently, the majority of trades placed on exchanges are electronic and some exchanges have even done away with their floor broker systems in the name of transparency and efficiency.

RELATED TERMS
  1. Pork Chop

    Pork chop refers to an arrangement whereby NYSE employees cover ...
  2. Give Up

    Give up is a procedure in securities or commodities trading where ...
  3. Two Dollar Broker

    A two dollar broker is a floor broker who executes orders for ...
  4. Designated Order Turnaround - DOT ...

    The designated order turnaround system routes orders for listed ...
  5. Interest Rate Floor

    An interest rate floor is an agreed upon rate in the lower range ...
  6. Hybrid Security

    A hybrid security is an asset that has features of two different ...
Related Articles
  1. Trading

    Electronic Trading Tutorial

    Learn about the systems that run the market.
  2. Trading

    Understanding order execution

    Find out the various ways in which a broker can fill an order, which can affect costs.
  3. Trading

    How Forex Brokers Make Money

    Forex brokers set their prices based on commission, spread, or a combination of both. Traders have to be cautious in the thinly regulated forex market.
  4. Investing

    5 Misconceptions About Discount Brokers

    While discount brokers are the perfect choice for some investors, their business model could be detrimental to others.
  5. Personal Finance

    Research Report Red Flags For Brokers

    Discover how to look past analysts' ratings to find winning stocks for your clients.
  6. Investing

    How to Choose a Forex Broker: Everything You Need to Know

    Take your time when looking for a forex broker because a bad decision can be costly.
  7. Trading

    Price Shading In The Forex Markets

    This practice puts brokers ahead of their clients, but it doesn't have to be a negative for traders.
  8. Trading

    Automated Trading Systems: The Pros and Cons

    Automated trading systems minimize emotions, allow for faster order entry, lead to greater consistency and resolve "pilot error."
  9. Personal Finance

    New York City Apartment Hunting: A Broker Or Not?

    New York City is one of the most difficult-to-navigate real estate markets in the world. A broker can guide you and, surprisingly, even save you money.
RELATED FAQS
  1. Why Are Securities Held 'In Street Name'?

    Buying or selling securities through a broker means they're held in your broker's name. Read Answer >>
  2. Why Do Brokers Ask for Personal Information?

    There are 3 reasons a broker needs personal information: suitability, record-keeping and the law. Read Answer >>
  3. What is the difference between a broker and a market maker?

    A broker is an intermediary who has a license to buy and sell securities on a client's behalf. Stockbrokers coordinate contracts ... Read Answer >>
Trading Center