The Securities and Exchange Commission recently approved a New York Stock Exchange proposal to significantly modify the NYSE’s current market structure. The approval signals the phase-out of the current specialist model in favor of a new category of market participants with responsibility for maintaining an orderly market and providing liquidity, Designated Market Makers (DMMs). The changes also amend current NYSE priority and parity rules; for example, DMM quotes will be on parity with those of floor brokers and those on the NYSE’s Display Book. Further, under the new rules, all NYSE market participants will now be able to post hidden liquidity (there will be a new type of reserve order with a published quantity of “zero”). Certain components of the new NYSE market model are scheduled to operate on a one-year pilot basis. In addition, the NYSE announced a pilot program that establishes a new category for upstairs, electronic, high volume members, the Supplemental Liquidity Provider, with a number of incentives (including financial rebates) that are designed to encourage aggressive liquidity providers.