June 10, 1999
Dow Jones Newswires
Eventual IPO Could Be In ECN Archipelago's Future
By GASTON F. CERON
NEW YORK -- An initial public offering could be in the cards for Archipelago, one of the private stock-trading systems that has sprung up to challenge the established order on Wall Street.
Gerald Putnam, the chief executive of Chicago-based Archipelago, told Dow Jones Newswires there's no set timeline for an IPO, but said it is clearly something the company would consider doing at some point. "It's part of my vision," he said in an interview Thursday.
Earlier Thursday, J.P. Morgan & Co. (JPM) said it agreed to acquire a 20% stake in Archipelago for an undisclosed sum. Other Archipelago investors include Putnam, online broker E*Trade Group Inc. (EGRP) and Goldman Sachs Group Inc. (GS).
J.P. Morgan approached Archipelago about acquiring the stake, Putnam said. "But we were pretty receptive," he added, as the company was and continues to look for investors and strategic partners.
Putnam said he likes the idea of his customers having an ownership stake in the firm through which they trade. That is why he was receptive to J.P. Morgan's offer and also why an eventual IPO might make sense, paving the way toward having public, for-profit stock exchanges. "If Mr. and Mrs. Jones want to own a 100 shares in the exchange they trade on, they should be able to do that," he said.
Archipelago is one of the electronic communication networks, or ECNs, that have recently emerged as challengers to the established stock exchanges. The threat of competition from ECNs was seen as a primary reason behind the push for extended trading hours.
This movement appears to have lost some steam, now that the New York Stock Exchange has delayed an extension of trading hours until the second half of 2000. By then the securities industry will presumably be finished dealing with the year 2000 problem and with the change to trading in decimals.
Putnam said he was happy with the Big Board's decision, noting that it could be challenging to have an orderly and liquid market during an evening session, at least at first. But he also indicated that extended trading hours are likely to become a reality at some point.
Currently, Archipelago operates from 8:30 a.m. until 5 p.m. EDT, two hours longer than the stock market's traditional 9:30 a.m. to 4 p.m. schedule. The Nasdaq stock market has proposed an evening session on some of its most liquid stocks, starting at 5:30 p.m. and ending at either 9 p.m. or 10 p.m., and hasn't yet said whether it will wait for the NYSE to act. But whenever Nasdaq expands trading hours, Archipelago is likely to follow suit. "If Nasdaq's open, we're open," Putnam said.
As the ECNs have grown to be a major force in the stock market, the NYSE has indicated it may look to strike some sort of an alliance with them. Putnam said Archipelago hasn't had discussions with the Big Board but would be willing to do so.
- Gaston F. Ceron; 201-938-5234; gaston.ceron@dowjones.com |
