Parity/Priority Allocation
Quick definition
NYSE's parity/priority allocation model (also called price-parity priority, or simply parity) is a matching algorithm on NYSE which first matches participants who set the best price, then allocates the remaining shares to other orders entered by floor participants at that price.
What is Parity/Priority Allocation?
NYSE is the only U.S. equity exchange that uses parity/priority allocation as its matching algorithm.
As the name implies, parity/priority allocation combines priority for orders based on price and time of arrival with parity, which allocates equal execution opportunities to floor participants such as floor brokers and Designated Market Makers (DMMs). Floor brokers may utilize e-Quotes to to receive such parity allocation of incoming executions.
Due to the parity/priority allocation model, floor participants on NYSE can potentially trade ahead of orders on the public limit order book that arrive earlier, affording significant advantages to floor brokers and DMMs.
Other floor privileges exist on NYSE. Another unique feature of NYSE is the D-quote order, which may be entered after the 3:50 PM cutoff for the NYSE closing auction.
References
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NYSE. (2024) "New York Stock Exchange broker systems and parity/priority allocation model." NYSE.
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NYSE. (2024) "NYSE Parity Frequently Asked Questions." NYSE.
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NYSE. (2023) "NYSE Technology FAQ and Best Practices." NYSE.
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B. Robert, Jennings, R., and McDonald, B.. (2021) "Deviations from time priority on the NYSE." Journal of Financial Markets.
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The NYSE D-Quote: The Disney Fastpass of Trading. The Bacidore Group.
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