Yes - it is good. First, Reg ATS will not simply permit this system (a VWAP system) to be operational without SEC scrutiny because of the volume issues - Reg ATS imposes more stringent restrictions and approval obligations once an ATS is generating more than minimal volumes. Second, ATG (UTTC) is operating VTS through a licensed B/D as a facility of a registered exchange. The ramp up tie to achieve all of the structures to operate it is not insignificant in and of itself. Third, as a facility of the PHLX, ATG's ability to introduce the intraday iterations of VWAP trading (including VWAP as a security) is liberalized substantially -- all iterations should be up and running almost from the get go.
Fred Rittereiser told me months ago that VTS is an ATS, not an ECN - they are apples and oranges, appealing to different customers, performing different functions. It seems to me that the ECN activity is more likely to affect or constitute competition to of ATG's future plans with regard to eMC and NextExchange, but that was understood by the company from day one and it is not as if they have been doing nothing the last 2 years and are only starting now. I would expect to see all of the UTS modules up and running by the fall of 1999 (Christine Geisser as much as confirmed that in an e-mail to another stockholder which was shared with me) which is clearly a good thing. VTS remains a unique system for the time being, and should generate some significant institutional activity. Competition is a fact of life in all of business - IMHO, ATG has the resources and the head start to weather the competition on VTS, and will have to prove itself in its other endeavors, but that is why the stock is at 10 and not 50 right now.
BTW, try thinking about it this way - in 1976, if one looked at the volume of PC sales and tried to extrapolate where we would be today, the numbers would be woeful compared to what has actually happened. The IBM XT (8088) was a great machine in its day, but was like the Flintstone's car compared to today's Lexus LS400 (an HP or Dell Pentium III at 450 mhz.) Electronic stock trading, particularly ATS systems at the institutional level, are not unlike the IBM XT - the start of something that will revolutionize over time the way stock trading is conducted. If ECNs and ATSs get 5% of the total market today, they will probably be looking at 25% of the total market 3 years from now. But there is no way to predict with any certainty where this will be 3 years from now, much less 5-10. I think ATG has a very talented, innovative and motivated team of professionals who are knowledgeable, experienced and at least have a flagship system that they are legally permitted to launch. It will not be as easy as you think for other exchanges to cut deals with ATS companies, get systems up and running, avoid SEC scrutiny if the system is likely to have impact, and simply compete at a snap of a finger -- this is pretty complex stuff and it ties in with their internal governance structures, keeping their specialists happy, adjusting to technological advances and trends in how trading commerce is conducted and signing contracts between parties with divergent interests. At least ATG is in the game, not at the sidelines. And I think its great (better than great) just to be in this type of game at the beginning. FWIW.
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