I'm long Ashton, but the competition is heating up:
Firms Plan New Stock Trading System
NEW YORK (Reuters) - Goldman Sachs Group Inc. and Merrill Lynch & Co, two of Wall Street's
premiere firms, said Monday that with brokerage firm Bernard L. Madoff Investment Securities, they
would form Primex Trading NA, an alternative stock trading system.
The system would offer electronic access to investors interested in trading stocks listed on the New York
Stock Exchange, the American Stock Exchange and NASDAQ, the newspaper reported. Primex is
expected to begin operations a year from now, at roughly the same time stocks begin being priced in
decimals rather than fractions, the Journal reported.
''What we are hoping to do is create an electronic extension of a pure auction securities market trading on
a physical floor by expanding participation to a broad-based electronic crowd,'' Peter Madoff, a senior
managing director at Madoff Investment Securities, said in the Journal article.
In an auction market, like the Big Board, all orders for a particular stock are handled by one trader, known
as a specialist, who is mandated to execute the trades plus maintain a fair and orderly market in the shares,
the newspaper said. A dealer market, like NASDAQ, has multiple traders, known as market makers,
executing customer orders in many places, the Journal said.
Spokesmen for Primex said it would differ from other alternative systems, known as electronic
communications networks, or ECNs, because Primex would be more than just a place for investors to
meet to execute trades at prices they have specified, the Journal reported. Rather it will allow investors to
receive prices on their trades that are superior to the current best bid or offer made by specialists or market
makers, the newspaper said.
Primex will do this by guaranteeing that its customers get the best current price for their trades while
allowing them to state how much more they would ideally like to receive for the stock they are selling or
how much less they'd like to pay if they could, the newspaper said. If another Primex customer were willing
to pay more for the trade or sell the stock for less, the client initiating the trade would benefit, the
newspaper said.
Primex will be accessible to brokerage firms, institutional investors, market makers and exchange
specialists. The entry of orders will be anonymous; the cost of participation in the system has not yet been
disclosed. Reut05:30 06-08-99 |
