Here we go: Its pretty long so I may put it on two posts.
"The New America" Thursday May 25, 1999
"Market Maker Gearing up for More Trades"
You dont have to reside amid the glitz of Wall street to make it in the financial world.
Knight/Trimark Group, Inc, the coungry's largest stock-trading firm, has made less than glamorous Jersy City N.J. its home. Why? Because it makes most of its trades electronically, it need not put up with Manhattan's monstrous rents.
"We're positioned near New York, the capital of market making, but we pay just $16 a square foot (a month)" said CEO Kenneth Pasternak.
The company trades more than 11,000 securities listed on the Nasdaq Stock Market and other exchanges. Based on trading volume, it controls a dominant 17% of the market-making business, analysts say.
Twenty-seven brokerage firms created Knight/Trimark in July 1995 as a low-cost technology-oriented firm to trade against their clients' orders. The company has since grown rapidly as online stock trading has continued to catch on. In the fourth quarter alone, the number os shares it traded rose 97% from a year ago.
"We're the largest destination for online originated transactions" Pasternak said.
Knight/Trimark is investing $20 million in technology this year. It plans to upgrade all its systems from the back office to the traders' desks. The company can currently handle up to 650,000 trades a day. After the opgrades, it should be able to support more than 1 million trades daily.
Traditionally K/T relied on its investors sich as E trade Group and Ameritrade Holding to send it customer orders. Its rivals include other brokerage firms and privately held market makers.
K/T uses computers to route orders to one of its 200 traders. Rather than charge commissions, it makes money by trying to bet correctly on the market. It does, however, pay brokerage firms for their retail orders, a common practice in the industry.
And the company has quite a track record. In the fourth quarter it paid $26.4 million for customer orders while recording net trading revenue of $115 million. It needs to have winning trades 55% of the time to show a profit, Pasternak says.
MOre on next post. |
