Optimark will crush them, they can't even get the stock stuff off of the ground: "Ashton Technologies Plans Electronics Options Market in 2000
8/25/99 16:19
Ashton Technologies Plans Electronics Options Market in 2000
Philadelphia, Aug. 25 (Bloomberg) -- Ashton Technologies
Group, a Philadelphia company developing a stock trading system
for the city's stock exchange, is planning to start an
independent electronic options market next year.
Ashton's NextExchange will take on the Philadelphia Stock
Exchange's options trading floor, the Chicago Board Options
Exchange and the other two established options markets. It will
also go head-to-head with the International Securities Exchange,
expected to be the first all-electronic options market.
``We will compete on several different levels, and we will
be different,' said Fred Weingard, chief technology officer at
Ashton.
Weingard declined to say how the exchange will be different
from the ISE and the existing options markets. Universal Trading
Technologies Corp., an Ashton subsidiary, is developing it and
will apply for Securities and Exchange Commission approval within
three to six months, he said.
The ISE and NextExchange are planning to open amid
unprecedented change in the options world. Federal regulators are
looking into how options trade. Several lawsuits allege the
exchange collude by listing certain options on a single exchange.
This week, competition grew more intense as the CBOE and the
American Stock Exchange listed options on Dell Computer Corp.,
previously an exclusive Philadelphia exchange franchise.
Average Pricing
On Friday, Ashton introduces its volume-weighted average
price trading system for the Philadelphia exchange, where both
options and stocks are traded. The so-called VWAP system is a
crossing system to let securities firms and institutional
investors place orders for stock at 9:15 a.m. New York time,
before trading begins at 9:30 a.m., and receive after the close
the average price at which the shares traded. It's designed for
index funds, foreign investors and quantitative money managers.
Like many other electronic systems, VWAP promises anonymity,
so investors can place orders without fear others will see those
orders and trade ahead of them. It doesn't guarantee execution,
however. A buy order for 1,000 shares of a stock is processed
only when there's a corresponding sell order.
Investment Technology Group Inc.'s Posit introduced average
price crossing systems several times in recent years with little
success, said Tony Huck, an ITG senior vice president. ``In this
market, with the volatility, there was little interest in people
being locked into a VWAP,' he said. ``So much can happen in the
course of a trading day.'
Weingard responded that institutional investors have
expressed interest in the system. He said it could garner as much
as 15 percent of U.S. stock volume.
The VWAP system, four years in the making, cost Ashton more
than $10 million to develop. The Philadelphia will charge between
1 cent and 2 cents a share for the service. Ashton will receive
an undisclosed percentage.
Ashton, which hasn't had a profitable year since it sold
shares to the public in 1996, lost $14.3 million in fiscal year
1999. It rose 3/16 today to 10 11/16. |
