Bloomberg and ITG to Form 'SuperECN'
May 20, 1999 08:05 AM
NEW YORK--(BUSINESS WIRE)--May 20, 1999--Innovators in Alternative Trading Systems, Bloomberg Tradebook(R) and ITG, To Create New Trading Model for Listed and Over-the-counter Stocks
Bloomberg Tradebook L.L.C., and Investment Technology Group, Inc., (ITG) today announced the formation of Tradebook SuperECN, a strategic partnership that will combine the benefits of Bloomberg Tradebook's fast-growing ECN with ITG's electronic execution products including QuantEX(R), ITG Platform and POSIT(R), the world's largest electronic equity crossing system. The partnership will offer to customers of both firms the ability to access both continuous and "mid-point crossing" liquidity in Nasdaq and listed shares at the same time.
An "ECN" is an "electronic communications network," a regulated type of agency broker that facilitates continuous matching of customer buy and sell orders while providing those orders with direct electronic access to the national market system. A "crossing system" electronically matches buy and sell orders at a derived price, such as the market mid-point, at discrete times during the day.
Bloomberg Tradebook and ITG have agreed in principle to develop jointly the proprietary SuperECN that will offer participants fast, efficient executions of trades in one of the largest available pools of liquidity in U.S. equities. Both firms plan to commit capital, technology and order flow to the venture, and expect to add additional partners. Bloomberg Tradebook and ITG are actively developing technology and applications for the SuperECN and will determine an official launch date once definitive documentation has been completed.
Lou Eccleston, managing director, Bloomberg L.P., Bloomberg Tradebook's parent, said, "The planned combination of the benefits of Tradebook and POSIT, two leading alternative trading systems, offers customers of the SuperECN immediate access to both a continuous and a crossing market. Clearly this partnership with ITG will enhance liquidity, bringing together both listed and Nasdaq stocks in one integrated element. For the future is the foundation of an entity that could shape tomorrow's execution paradigm--not just in U.S. equities, but across global equities markets."
Raymond L. Killian, Jr., chairman, chief executive officer and president of ITG, remarked, "We are excited about the SuperECN concept. ITG will develop advanced electronic trading products that access the SuperECN in addition to an integrated link between POSIT and Bloomberg's Tradebook system. We have long felt that crossing and order-driven markets should be united in an effort to provide the greatest liquidity. This alliance will give our mutual customers enormous efficiency as a linked execution system."
Bloomberg Tradebook L.L.C., President Kevin Foley said, "Tradebook has led ECNs with service and innovation, bringing the new national market system to trading and investing professionals. Partnering with ITG brings even more value to our customers' search for best execution for all their orders, large and small, Nasdaq and listed."
The blending of an ECN and a crossing market will not be the SuperECN's only innovation. To ensure success, Tradebook SuperECN will have a unique equity structure designed to encourage liquidity formation and to maximize the benefit to customers. A capital contribution in the SuperECN is required of current and future partners, but ownership levels in the long run will be predominantly determined by a formula that rewards order flow contribution rather than capital contribution.
"We chose not to sell interests in Tradebook the traditional way, for cash on the barrel," said Eccleston. "This is a new model that will reward the ability and the willingness of partners to contribute substantial order flow. This deal is about liquidity, and that's why it will bring so much benefit to customers and prospective customers of both Bloomberg and ITG." |
