Rob - Interesting question. I think eMC has been made to wait while ATG takes Hill VWAP from the enemy, so to speak. But as eVWAP moves from the drawing board into the street, you have to think eMC will be accelerated in a big way. Which suggests 3 possible sources of capital -- first, one of the system's constituents -- if eMC is designed to serve banks, mid-size brokers and other intermediaries looking for better delivery of financial services with an institutional orientation, then you need only look at the top internet banks as rated by Gomez Advisors for a glimpse at a very real possibility of financial partner for eMC. My second guess would be the more traditional route of investment banking community. If Gomez proves to be a successful IPO, and eMC is developed into an atttractive financial services portal for financial intermediaries, with true potential for sponsorship by a widely spread institutional niche, then any number of investment banks or other institutional sources (including, for all we know, some who may have recently signed up to clear trades and outsource institutions within eVWAP) might be interested in becoming a partner to eMC for the sake of its participation in an ultimate IPO. Of course, if Gomez turns out to be a successful IPO, then the third possibility (cash from the sale of Gomez stock) arises, if ATG can hold out that long.
As I recall, the cost to fully develop and deploy eMC was approximately $30 Million over 4 or 5 years. I would expect that ATG is 1-2 years in, and that the money needs will become more acute as they move closer to deployment. First things first, though -- success within eVWAP is very important to Ashton right now, and you have to think they are pretty focused on making that happen first and foremost. And now that January 3 is behind us, so many different things can happen that will enhance volumes and make eVWAP a successful system:
1. Simply expanding the universe of customers to include the institutions and others who can come into the system through the 8 clearing agents, and hard wiring all affected parties.
2. Introduction of more eligible stocks, including the very popular NASDAQ tech stocks.
3. Introduction of Market on Close.
4. Introduction of intraday VWAP iterations.
5. Alliances with specialists, market makers, B/D's and other traders to provide liquidity by committing to match unmatched orders on certain stocks traded within eVWAP.
6. Alliances with other intermediaries and aggregators to provide a wider base of liquidity.
7. Integration of Asian and Canadian operations, creation of cross-border liquidity and penetration into foreign markets.
8. Development and integration of other UTS trading systems - remember the UTS/ATED platform was designed to integrate all aspects of the "Universal Trading System" of which VWAP was one part.
9. Transformation into exchange status through NextExchange and/or in alliance with the PHLX and others. An electronically based exchange designed to address the needs of the institutional trader.
Possible? Oddly enough, I think inevitable. A combination of hard work, vision, luck and good timing could come together and dust this one out of the park. Worst case, this should still be a solid company with a good revenue base and profitability for years to come. Best case, this may be really be huge, revolutionary, and simply in the right place at the right time.
I opened a fortune cookie late the other night in a stolen Chinese take out dinner in the middle of the most arduous closing of a transaction I have ever participated or been involved in. The fortune said "You will soon be sitting on top of the world". Now I don't believe in fortune cookies, (and I really don't believe that my out of town trips have any influence on the stock). But I do believe that there are times when things just hit on all cylinders, when it all times out perfectly (even just after it seems mired in delay). This may be one of those times, who really knows for sure. But you can never take advantage of such situations if you are not there when it happens, if all you do is watch from the sidelines and say "this can never pan out as well as so and so says it will". No guts, no glory.
It seems intuitive that the market will take to these systems that are designed to help the largest traders fight off the inequities, dishonesty and built-in advantages of the status quo of stock trading. If you put a 500,000 share trade out there in the traditional way, someone will pick your pocket along the way and pick up a few extra bucks. The traders of 1 Billion shares a day will see the benefits of taking some percentage of their trades outside the manipulations of the order flow/price and volume disclosure world of trading and into the anonymous environment of an inherently fair price. Eventually, maybe sooner rather than later, the major players of trading will join in rather than suffer real decline at the hands of these technological upstarts. From where I sit, it seems like it can't miss -- having survived the period that could have killed it off through delay and lack of money, it should fly. Who would not want to become a partner to that?
MST |
