Nasdaq SuperMontage: Will ECNs Survive?

April 15, 2002

Abstract

Boston, MA, USA April 15, 2002

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Celent Communications predicts that SuperMontage will shake-up the competitive landscape of the U.S. equities market, accounting for close to 70 percent of the Nasdaq market share by 2005. Those ECNs not participating in SuperMontage will quickly see their market share evaporate.

In a new report, entitled ?, Celent examines how SuperMontage will impact Nasdaq and, in particular, the future viability of ECNs.

Over the past few years, ECNs have become major sources of liquidity within Nasdaq, representing well over 30 percent of Nasdaq volume. The very success of ECNs may, however, lead to their ultimate downfall, as Nasdaq is about to launch its answer to ECNs in the form of SuperMontage, a fully integrated order display and execution trading platform.

According to Sang Lee, Analyst at Celent, "ECNs have come a long way since their inception in 1997. In a relatively short period of time, ECNs have carved up a significant level of market share within Nasdaq. However, the eventual launch of SuperMontage threatens to reshape Nasdaq. In this new world, the very existence of ECNs may be redundant."

Octavio Marenzi, Managing Director at Celent states, "ECNs represented a temporary solution to a fragmented marketplace. With the launch of SuperMontage, and the consequent centralization of Nasdaq liquidity under SuperMontage, we expect to see the beginning of the end of ECNs as we currently know them."

A Table of Contents is available online.

of Celent Communication's Institutional Securities & Investments research service can download the report electronically by clicking on the icon to the left.

        

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Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned subsidiary of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America
Michele Pace
mpace@celent.com
Tel: +1 212 345 1366

Europe (London)
Chris Williams
cwilliams@celent.com
Tel: +44 (0)782 448 3336

Asia (Tokyo)
Yumi Nagaoka
ynagaoka@celent.com
Tel.: +81 3 3500 3023

Table of Contents

 

Boston, MA, USA April 15, 2002

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Return to report Abstract

 

EXECUTIVE SUMMARY 3
INTRODUCTION 4
MARKET OVERVIEW 5
  Pre-SuperMontage Nasdaq 5
  Question of Trade Share Volume 6
  Things to Ponder 12
NASDAQ SUPERMONTAGE 14
  What is it? 14
  Technology 16
ECN PROFILES 18
  Archipelago 18
  Bloomberg Tradebook 21
  Brut 23
  Instinet 25
  Island 28
ECN COMPARISONS 32
  Market Share Figures for 2001 33
  Recent Changes 35
IMPLICATIONS OF POST-SUPERMONTAGE 39
  Potential Scenarios 40
  Will ECNs Survive? 41
FUTURE TRENDS 44

 

        

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