Jersey City, New Jersey, Dec. 9 (Bloomberg) --
Knight/Trimark Group Inc. is executing 500,000 trades a day, almost 50 percent above record levels of six months ago, as Nasdaq trading surges, Knight's chief executive said.
Adding to Knight/Trimark's gains is Merrill Lynch & Co., which debuted its discount brokerage services last week.
Knight/Trimark, the biggest middleman for brokerages and institutions making Nasdaq trades, is benefiting from an increase in Nasdaq volume and trading by customers of both Internet and traditional brokerages, said Kenneth Pasternak, president and CEO. The firm is executing trades from Merrill customers, and now sends all of its executed trades to Merrill for clearance and settlement.
``This quarter from a volume point of view has been a blockbuster -- the volumes are off the wall,' Pasternak said. ``And so far the relationship with Merrill has been good on the clearance side, and we've been a destination for volumes of trades from them that are meaningful to us.'
He declined to give exact figures.
Knight/Trimark, formed in early 1995 by two dozen discount brokerages, relies on the Internet brokerage industry for about half of its trades. In the third quarter, amid an 8 percent decline in Internet brokers' trades, Knight/Trimark's trades executed fell 6 percent to 319,348 daily.
Analysts at BancBoston Robertson Stephens and Salomon Smith Barney today raised revenue estimates for E*Trade Group Inc. and Ameritrade Holding Corp., citing volumes that could be 30 percent above third-quarter levels. E*Trade and Ameritrade are among Knight/Trimark's biggest customers.
Knight/Trimark could gain from Internet trading products offered in the past two months by Merrill and Morgan Stanley Dean Witter & Co., Pasternak said. On Dec. 1, Merrill, the biggest U.S. brokerage, started allowing customers to make trades over the Web for as little as $29.95, a tenth the commission charged some customers who use a broker.
``Over the last six to eight weeks we've become an increasingly important destination for institutions and formerly off-line -- or next-generation online -- firms,' he said. ``The big online brokers are less of a percentage of our revenue. We're certainly not a one-trick pony.'
Knight/Trimark's Nasdaq market share rose to 18.8 percent in November from 14.6 percent in October, on a two-thirds rise in shares traded to 6.4 billion, according to AutEx Group, which tracks market makers' activity.
Knight/Trimark rose 5 1/2, or 12 percent, to 49 11/16 in Nasdaq Composite Index trading. Hambrecht & Quist Group raised earnings estimates for the company today, while Jefferies & Co. yesterday raised its rating on the stock to `buy' from `accumulate.'
Pasternak said a National Association of Securities Dealers arbitration panel gave his firm a ``97 percent victory' in its quest to bar electronic communications networks from charging for access to their stock quotations. ECNs now account for about 30 percent of Nasdaq trades.
The panel on Monday awarded All-Tech Investment Group Inc. $3,870 plus interest, reduced from the $97,537.50 All-Tech sought, in its dispute with Knight/Trimark, the Wall Street Journal reported today.
``They weren't able to charge for access, they were able to charge for the normal interaction that takes place on the Nasdaq,' said Pasternak. ``ECNs' business models depend on being able to charge for access, and that model has no inherent functionality aside from interacting with other firms in a larger market context.'
Harvey Houtkin, All-Tech's CEO, didn't immediately return a call for comment.
Pasternak said Knight/Trimark's European market-making operations will likely start operations by the fall of 2000, after the Easdaq stock market next summer unveils new technology enabling it to handle more trades than its current 3,000 daily. In October, Knight/Trimark bought 19.5 percent of Easdaq for about $8 million.
In November, the company agreed to buy Arbitrade Holdings LLC for $459 million in stock. ``We're not on the prowl to buy anything right now. Europe and Arbitrade will keep us pretty busy,' he said.
A Merrill Lynch spokeswoman couldn't immediately be reached for comment. The firm last week declined to give statistics on its customers' online trading activity. |
