Paul Allen's fund invests in Island
By Emily Church, CBS MarketWatch
Last Update: 12:00 PM ET Jun 10, 1999 Internet stocks
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NEW YORK (CBS.MW) -- Microsoft co-founder Paul Allen's venture fund is investing $25 million for a 12 percent stake in Island ECN, a Datek-controlled electronic stock trading platform.
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Updated:
6/10/99 2:19:26 PM ET
The investment -- announced Thursday -- is the second big investment by Allen's Vulcan Ventures into Datek Holdings, one of the largest Internet brokers. In May, the fund joined French businessman Bernard Arnault and Boston's TA Associates investment fund to invest a total of $300 million into Datek's online brokerage in exchange for a minority stake. See full story.
Island, a fast-growing ECN, has filed to become a stock exchange. Analysts say the ECN is prepping to become "transaction engine" for financial products, likely beyond stocks.
Vulcan's move into Island tracks investment across the e-channel by some of Wall Street biggest players as the firms place bets on where the biggest volume of stocks will be traded.
To wit: J.P. Morgan & Co. (JPM: news, msgs) on Thursday announced it's acquiring a 20 percent stake in Archipelago, a rival ECN. Goldman Sachs (GS: news, msgs) and E-Trade (EGRP: news, msgs) have each already taken 25 percent stakes in the ECN. See StockWatch for more.
Meanwhile, Madoff Investment Securities, a top market maker, is linking up with Merrill Lynch (MER: news, msgs) and Goldman Sachs to create another platform to trade equities.
The three are forming a new company, Primex Trading, to provide a platform to trade stocks using an auction system. As reported by CBS.MarketWatch on March 18, Madoff expects the trading platform will be launched next year and is based on prices quoted in decimals.
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