Profiling the ECNs

May 9, 2000

Abstract

Cambridge, MA, USA, May  18, 2000

Report published by  Celent Communications

Electronic communication networks (ECNs) have rattled the boards among market makers, with competition growing feverishly among them.  However, gaining market share on the Big Board is still eluding ECNs.  For the foreseeable future, ECNs will continue to struggle in attracting order flow from stocks listed on the New York Stock Exchange (NYSE), accounting for approximately nine percent of NYSE-listed trading volume by 2003.

Members of Celent Communication’s Institutional Securities & Investments  research service can be download this report electronically by clicking on the icon to the right. A Table of Contents for this report can be viewed online.  

The SEC, Nasdaq and large Wall Street firms have directed their focus toward formulating a coherent market strategy towards the creation of a central limit order book.  Amid this uncertainty, ECNs will seize the advantage and continue to gain market share in Nasdaq trading volume, representing over 50 percent of all Nasdaq trading share volume.

In a new report, “ ,” Celent Communications examines those ECNs that have continued to capture increasing share, currently accounting for more than 30 percent of all Nasdaq trading volume.  This report provides an in-depth analysis of each ECN, examining the business and technology strategies that have propelled them into the spotlight.

“ECNs have moved beyond functioning as a mere dumping ground for unmarketable limit orders and have established themselves as a major force Nasdaq,” noted Sang Lee, an analyst for Celent.   “While Instinet still remains the ECN to beat, the race for increased market share is heating up.   Island, which once held a comfortable margin as the second largest ECN, is losing some of its market share as REDIBook, Archipelago, and BRUT have emerged as serious contenders.”

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 operating unit 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

 

Cambridge, MA, USA, May  18, 2000

Return to Abstract of this report.

 

EXECUTIVE SUMMARY 3
INTRODUCTION 4
MARKET OVERVIEW 5
  Origins of ECNs 5
  Market Penetration 6
PROFILES OF ECNs 11
  Archipelago 11
  Attain 14
  Bloomberg Tradebook 16
  Brut/Strike 19
  Instinet 21
  Island 24
  MarketXT 27
  NexTrade 30
  REDIBook 32
COMPARING THE ECNs 35
  Liquidity 35
  Technology 35
  Connectivity 37
  Ownership and Strategic Partnerships 38
  Ranking the ECNs and Future Prospects 40
FUTURE TRENDS 42

List of Figures and Tables

FIGURE OR TABLE PAGE
ECNs

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