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Strategies & Market Trends : DAYTRADING Fundamentals
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To: Eric P who started this subject1/1/2002 7:32:41 PM
From: gwb-trading  Read Replies (1) of 18137
 
Will SuperMontage drastically lower ECN volume...

The proposed SuperMontage system will allow Market
Makers to display both attributable and non-attributable
quotes. The Market Maker name (MMID) will be displayed
next to attributable orders. An anonymous ID named "SIZE"
will be displayed next to non-attributable orders.

Currently most MMs use ECNs in order to work orders
anonymously. They can move volume through an ECN while
keeping their identity a secret. MMs also play their
typical games of posting on one side of the market while
collecting/distributing on the other via an ECN.

It appears that the SuperMontage proposal will reduce
this volume that is sent to the ECNs. Coupled with the
fact that an MM will not have to pay ECNs fees to
perform an anonymous trade. I expect that this will
signifincatly reduce volume and liquidity on ECNs.
This fundamentally is bad for day traders who normally
strongly prefer using ECNs.

Many folks view the Nasdaq SuperMontage system targets
putting ECNs out of business while increasing the volume
traded across a more closed Nasdaq system. The usage of
non-attributable orders that actually reduce market
transparency tend to support this train of thought.

Do any folks have exact figures on how much of each ECNs
volume is derived from MMs? This will provide everyone
with a better idea of the impact when SuperMontage is
implemented.

- Greg
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