July 21, 1999 08:17
Four Major Firms Join Forces to Launch New ECN
Spear, Leeds & Kellogg; Fidelity; DLJ and Charles Schwab Sign Letter of Intent
NEW YORK, July 21 /PRNewswire/ -- Four major brokerage and financial services firms today announced that they have signed a letter of intent on a wide-ranging technology sharing and order management agreement which will have as its centerpiece a new electronic communications network (ECN). Spear, Leeds & Kellogg; Fidelity Investments(R) (its trading division Fidelity Capital Markets); Donaldson, Lufkin & Jenrette (NYSE: DLJ) (with its affiliates DLJdirect (NYSE: DIR) and Pershing); and The Charles Schwab
Corporation (NYSE: SCH) (its trading division Schwab Capital Markets & Trading Group) will each have an equal stake in this proposed joint venture. The new ECN, which has yet to be named, will leverage the
existing technology and liquidity of the REDIBook(TM) ECN (the third largest ECN), currently operated by Spear, Leeds & Kellogg, in addition to the substantial retail, institutional and market maker liquidity of the four firms. Terms are not being disclosed. The preliminary agreement is non-binding and subject to satisfaction of customary documentation and closing conditions, including the receipt of regulatory approvals.
ECNs are computerized trading networks that match subscribers' buy and sell limit orders. Historically, ECNs were used primarily by institutional investors as a private network to post bids and offers
anonymously. Recently, however, as new rules have made ECN price quotes available to the market at large, ECNs have garnered an increasing share of the Nasdaq market -- as much as 20-25% by some
estimates.
While there are currently nine ECNs, these systems generally cannot succeed without a large number of subscriber orders to provide and attract liquidity. The proposed joint venture would create an innovative new trading platform that pools the tremendous order flow of the four firms. The group expects to participate in the ECN and contribute order flow to see how retail and institutional customers can benefit, and to gain experience in these emerging market structure technologies.
This joint venture would combine the strengths of four of the biggest names on Wall Street, including: three of the top online brokerage firms (Schwab, Fidelity, DLJdirect); three of the biggest clearing firms (Spear, Pershing, Fidelity); four major Nasdaq market makers, including two of the largest wholesale dealers (Spear and Schwab's Nasdaq market making affiliate Mayer & Schweitzer, Inc.); two of the largest mutual fund managers and mutual fund supermarkets (Fidelity, Schwab); and four of the biggest specialists on the
national and regional stock exchanges.
Company Quotes
Gary Goldring, Senior Managing Director, Spear, Leeds & Kellogg
This alliance will leverage REDIBook's state-of-the-art-technology with the retail, institutional and professional breadth and liquidity of the other participants, representing an opportunity to significantly expand the liquidity in the network.
Robert Mazzarella, President, Fidelity Brokerage Services, Inc.
Fidelity Capital Markets, along with its other alliance members, has
been at the forefront of developing new trading platforms. We
believe that the combined experience and expertise of the four
companies in the new ECN will benefit customers with high-quality
executions in this rapidly changing marketplace.
K. Blake Darcy, Chief Executive Officer, DLJdirect
DLJdirect and the other firms in this venture are industry leaders in
providing quality products and services to investors in the evolving
electronic financial services marketplace. This ECN, which is
designed to be one of the fastest and most flexible in the industry,
is one more example of our commitment to our clients.
Peter Cohan, Managing Director, Donaldson, Lufkin & Jenrette
This alliance, which combines the cooperative strengths of four of
the biggest names on Wall Street, is a milestone in the history of
the financial services industry. The combined retail, institutional
and market maker liquidity among these four firms has the potential
to provide significant benefits to all of our clients.
Lon Gorman, President, Schwab Capital Markets & Trading Group
As we consider the opportunities to provide quality executions for
customers, ECNS are a key component of the emerging market landscape.
This group has taken a thoughtful approach in developing an ECN
alliance that would create a tremendous amount of liquidity.
Company Background
Spear, Leeds & Kellogg is the nation's largest specialist and market-making firm in equities and options as well as the largest clearing member of each of the nation's principal equities and options exchanges. The Company is also a leading provider of order flow routing and trading software. REDIBook(TM) is the ECN operated by Spear, Leeds & Kellogg to supports its proprietary computer interface called REDIPlus(TM). For more information about Spear, Leeds & Kellogg, please visit www.slk.com.
Fidelity Investments(R) is the nation's largest mutual fund company and a leading provider of financial services. Fidelity offers investment management, retirement, brokerage and shareholder services directly to individuals and institutions, and through financial intermediaries. The firm is also the number one provider of
401(k) retirement savings plans, the second largest discount brokerage firm and the third largest provider of 403(b) plans for not-for-profit institutions. At May 31, 1999, Fidelity had total managed assets of $819.8 billion. Fidelity Capital Markets is a division of National Financial Services Corp. (Member NYSE, SIPC), Fidelity Distributors Corp. For more information, refer to www.fidelity.com.
Donaldson, Lufkin & Jenrette is a leading integrated investment and merchant bank serving institutional, corporate, government and individual clients. DLJ's businesses include securities underwriting; sales and trading; investment and merchant banking; financial advisory services; investment research; venture capital; correspondent brokerage services; online, interactive brokerage services; and asset management. Founded in 1959 and headquartered in New York City, DLJ employs approximately 9,100 people worldwide and maintains offices in 14 cities in the United States and 11 cities in Europe, Latin America and Asia. For more information on Donaldson, Lufkin & Jenrette, refer to the company's world wide web site at dlj.com.
DLJdirect is one of America's premier online brokerage firms. Established in 1988, DLJdirect offers a broad range of investment products and services to sophisticated, self-directed investors. DLJdirect has more than 650,000 customer accounts representing approximately $13.3 billion in assets. For more information on
DLJdirect, refer to the company's world wide web site at www.dljdirect.com.
Pershing, a division of Donaldson, Lufkin & Jenrette Securities Corporation, is a leading provider of global correspondent financial services to over 600 independent institutional and retail financial organizations. Located in nine offices worldwide, Pershing provides a full range of investment-related products and services to the financial services community. Its businesses include execution, settlement, financing and information management services. For more information on Pershing, refer to the company's web site at www.pershing.com.
The Charles Schwab Corporation, through its principal operating subsidiary, Charles Schwab & Co., Inc. (member SIPC, NYSE), is one of the nation's largest financial services firms serving 6.2 million active accounts with $592 billion in customer assets through 310 branch offices, four regional customer telephone service centers and automated telephonic and online channels. Schwab Capital Markets & Trading Group comprises the Institutional Brokerage and trading arms of Charles Schwab & Co., Inc. For more information, refer to the company's web site at www.schwab.com.
SOURCE The Charles Schwab Corporation
/CONTACT: Jim Griffin of Fidelity Investments, 617-563-5800; or Linda
Finnerty of DLJdirect & Pershing, 201-413-3187; or Marta von Loewenfeldt of Charles Schwab & Co., Inc., 212-804-3668; or Carl Hewitt of Spear, Leeds & Kellogg, 212-433-7015/
/Company News On-Call: prnewswire.com or fax, 800-758-5804, ext. 154881/
/Web site: slk.com
/Web site: dlj.com
/Web site: dljdirect.com
/Web site: pershing.com
/Web site: schwab.com |
