This site uses cookies. By continuing to browse the site you are agreeing to our use of cookies. Find out more here.  
  • Delicious




NASDAQ Gains SEC Approval For Super-ECN

Philip Morton, Investors Offshore.com

14 February 2001

The battle for supremacy amongst the world's Electronic Crossing Networks has stepped up a gear with the recent announcement that NASDAQ's plans for a new 'super-ECN' have been approved by the US Securities and Exchange Commission. Other ECNs, which now face a challenge from the very exchange out of which they grew, have fiercely opposed the move, concerned that if NASDAQ and its parent continue to operate the Securities Information Processor (SIP), and run SuperMontage as well, they will have an effective monopoly. However, it is understood that the SEC will seek to separate these functions, requiring NASDAQ to build an alternative quote-and-trade facility.

Following hot on the heels of Instinet's IPO announcement, SuperMontage is now eyeing an offering of its own, having raised $180 million two weeks ago in a private placement to pave the way. Instinet is currently at the top of the ECN pile, as Scott Appleby, an analyst at Robertson Stephens explains: 'Instinet is clearly a destination for liquidity. They're the eBay of trade execution.'

This position, however, is no longer assured, and the NASDAQ SuperMontage exchange will almost certainly eat into Instinet's market share, despite the latter's attempts to distance itself from other ECNs, which will now undoubtedly be feeling the pressure to take the plunge themselves.

Research has shown that European and American demand for ECNs stem from very different sources, with European investors attracted by the idea of anonymous direct access to the exchanges, and US investors more interested in the low cost execution aspects. Either way, Electronic Crossing Networks look set to become an increasing part of the trading landscape, and it looks like battle has commenced in the IPO market.

.

 

 






Write a comment