(PR Wires) DJ: Archipelago Announces Agreement to Sell 25 Percent Share
DJ: Archipelago Announces Agreement to Sell 25 Percent Shares in Company To
Both E*TRADE and Goldman Sachs
CHICAGO, Jan. 7 /PRNewswire/ -- Archipelago (Nasdaq: TNTO), operator of an
established Electronic Communication Network (ECN) for NASDAQ stocks, today
announced that E*TRADE Group, Inc. (Nasdaq: EGRP), the provider of a leading
branded destination Web site for online investors, and The Goldman Sachs
Group, L.P., the international investment banking and securities firm, have
each agreed to acquire a 25 percent share of the company. No financial
details were available.
Under the agreement, E*TRADE and Goldman Sachs, as well as the founding
partners, Virago Enterprises, LLC and Townsend Analytics, Ltd., will each
own 25 percent of the voting interest of a new company, Archipelago
Holdings, LLC. Created in 1997, Archipelago is one of 9 ECNs granted
permission by the Securities and Exchange Commission (SEC) to allow purchase
and sale transactions to be matched electronically outside the exchange
trading system. Archipelago currently serves approximately 4,000 individual
and institutional traders.
As two financial services leaders, E*TRADE and Goldman Sachs represent
exceptional partners for Archipelago. This agreement will make our network
an even more powerful force in the ECN market, said Jerry Putnam, President
of Terra Nova Trading and one of the founding partners of Archipelago.
Since the Securities and Exchange Commission (SEC) passed regulatory changes
to allow alternative trading systems in 1996, ECNs have played a growing
role in the equities trading market. ECNs currently account for some 25 to
30 percent of the share volume for NASDAQ stocks. ECNs allow orders to be
directly routed and displayed on the floor of an exchange or the NASDAQ
Stock Market without the need for an intermediary, and assuring order
anonymity.
ECNs are clearly a significant and growing segment of todays financial
services market, said Duncan L. Niederauer, a managing director at Goldman
Sachs. Our investment in Archipelago demonstrates Goldman Sachs continued
commitment to provide our clients with the broadest array of liquidity
services.
With E*TRADE and Goldman Sachs as major partners in this enterprise,
Archipelago has the opportunity to establish itself as the premier ECN
serving both the retail and institutional markets, Christos M. Cotsakos,
Chief Executive Officer and Chairman-Elect of E*TRADE. The Archipelago
trading system provides tremendous benefits to its users. We intend to
aggressively market that value proposition in order to grow its ECN market
share. We want Archipelago to win wide recognition as the reliable and
trusted solution for alternative trading systems.
Archipelago has an exclusive agreement with Townsend Analytics, Ltd., for
use of Townsends proprietary Book Server software, which enables ECN order
matching and preferencing, for the purpose of trading U.S. equities and a
nonexclusive agreement for purposes of trading other financial instruments.
In addition, Archipelago has a licensing agreement with Townsend Analytics
to distribute RealTick and RealTrade front-end software for active
individual and institutional traders under the Archipelago label.
Based in Chicago, Archipelago LLC will be operated as a stand-alone company.
Its current management and technology development team will remain in place
and no personnel reductions are planned.
About E*TRADE
A leading branded provider of online investing services, E*TRADE has
established a popular destination Web site for self-directed investors. The
company offers independent investors the convenience and control of
automated stock, options and mutual funds order placement at low commission
rates. In addition, E*TRADE has a suite of value-added products and
services that can be personalized, including portfolio tracking, Java-based
charting and quote applications, real-time stock quotes, Smart Alerts,
market commentary and analysis, news, investor community areas and other
information services. E*TRADE was ranked the number one overall online
brokerage service in two consecutive quarterly reviews conducted by Gomez
Advisors, a leading independent authority devoted to online financial
services (Q3/Q4 1998).
In October, the E*TRADE Web site was named the number one online investing
site in an international survey of the industrys top twenty Internet
brokerage firms by Lafferty Information and Research Group, a global
provider of high-value and business information research.
Customers can access E*TRADE at etrade.com on the Internet and
through many other electronic channels and online services (AOL Keyword:
E*TRADE). E*TRADE Securities Inc., and its parent company, E*TRADE Group
Inc., are headquartered in Palo Alto, Calif.
About Goldman Sachs
The Goldman Sachs Group, L.P. is a leading international investment banking
and securities firm, providing a full range of investing, advisory and
financing services to corporations, governments, institutions and
substantial individuals worldwide. Founded in 1869, it is one of the oldest
and largest investment banking firms. Goldman Sachs is headquartered in New
York and has 40 offices in 23 countries around the globe.
About Virago Enterprises, LLC
Virago Enterprises, LLC is an online broker catering to investors with
active trading accounts. Founded in 1994, Virago has 4,000 customers who
route electronic orders over the Internet and private networks. Virago has
its principal offices in Chicago and operates 12 branch offices located
throughout the United States.
About Townsend Analytics, Ltd.
Townsend Analytics is a leading provider of comprehensive quote display,
charting and order entry applications for the active trader. Townsend
Analytics was founded in 1987 and is owned by Stuart and MarrGwen Townsend.
Townsend Analytics is headquartered in Chicago and has approximately 50
employees.
/CONTACT: Sam Long or Larry Hill, both of Archipelago, 312-960-1316; or
Susan Walker of Neale-May & Partners, 650-328-5555, ext. 119, or
swalker@nealemay.com, for Goldman Sachs Group, L.P./
08:20 ES
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