11/2/99 Reuters Eng. News Serv. 12:06:00
Reuters English News Service
C) Reuters Limited 1999.
Tuesday, November 2, 1999
USA: OptiMark, Knight in pact to boost order flow, pricing.
JERSEY CITY, N.J., Nov 2 (Reuters) - OptiMark Technologies Inc., which runs an
electronic system that matches stock trades, said on Tuesday it formed an
alliance with Knight/Trimark Group Inc. , the biggest buyer and seller of
shares on the Nasdaq stock exchange, with the aim of increasing stock trading
volume and improving prices.
Knight/Trimark, which carries out about 350,000 trades a day, said it will put
up to 20 percent of its trades through OptiMark's system, expanding the flow
of share orders on OptiMark that is necessary to match buyers will sellers.
In return, it will earn warrants in OptiMark stock based on this trade volume
and could potentially gain the biggest ownership stake in Optimark, which is
backed by a string of leading Wall Street brokers.
Its share trading volume, also known as liquidity, also could improve, as
could prices on some of its orders it places on behalf of investors, Kenneth
Pasternak, Knight/Trimark's chief executive, said in an interview.
"Liquidity begets liquidity," he said.
Stock matching systems and share dealers need liquidity, or order flow, to
match stock orders at good prices.
Knight/Trimark's stock jumped 2-1/4 to 30-3/4 following the announcement of
the three-year alliance.
OptiMark, based in Jersey City, N.J., is known for its electronic
trade-matching system that allows traders to anonymously carry out large stock
orders typically placed by big institutional investors.
Backed by the likes of Goldman Sachs Group Inc. and Merrill Lynch and Co. Inc.
, OptiMark uses a call system, spending five minutes taking in bid and sell
orders on stocks then anonymously matching them in seconds for institutions. Its system has been in operation since January.
"Knight/Trimark's trading volume will provide a significant boost to the
liquidity in OptiMark, benefiting all of OptiMark's customers who are seeking
liquidity in a confidential environment and accelerating our overall growth,"
Phillip Riese, OptiMark's chief executive officer, said.
Knight/Trimark, which carries out many of the trades occurring over the
Internet and is a share dealer in more than 7,300 stocks trading on the Nasdaq
market, will consolidate its retail stock orders into larger block trades and
put them through OptiMark's system, to be matched up with institutional
orders.
"Optimark's strong desk-top presence among institutions and advanced trading
systems WILL DEEPEN OUR PRESENCE IN THE INSTITUTIONAL MARKET,"
Pasternak said.
Knight/Trimark is a share dealer, or market maker, which makes money on the
difference between the price it pays for shares and the price for which it
sells them, known as the spread.
((Mary Kelleher, Financial services desk 212-859-1644)).
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