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Non-Tech : Knight/Trimark Group, Inc. -- Ignore unavailable to you. Want to Upgrade?

To: GRANOLA who wrote (2661)	7/21/1999 2:26:00 PM
From: Chi-X	Read Replies (1) \| Respond to of 10027

DJ New ECN Met With Enthusiasm By Peer; Shakeout May Loom By Gaston F. Ceron, Lynn Cowan and Allison Bisbey Colter NEW YORK (Dow Jones)--The arrival of a new set of players into thegrowing market for electronic trading systems could heat up ompetition in that industry, perhaps leading to a shakeout among the existing operators, and is also seen as raising the trading systems' profile. Earlier Wednesday, four major financial-services firms - brokers Donaldson Lufkin & Jenrette Inc. (DLJ) and Charles Schwab Corp. (SCH), mutual fund giant Fidelity Investments and market specialist Spear Leeds & Kellogg (X.SLK) - joined forces to form a new electronic trading system, as yet unnamed, which will eventually displace Spear Leeds' Redibook trading system. The announcement by the firms is the latest development in Wall Street's love affair with the trading systems, known as electronic communication networks, or ECNs. The systems, which electronically match buyers and sellers of stocks, have emerged as a force on the Street and major securities firms have been linking up with them. Goldman Sachs Group Inc. (GS) and J.P. Morgan & Co. (JPM), for example, own part of one ECN, Archipelago. Wall Street players have long speculated that the number of ECNs - there are nine or 10, depending on who you ask - and the little liquidity some of them have will lead to a shakeout. Robert Schwartz, finance professor at the Zicklin School of Business at Baruch College in New York, said the market can't sustain so many ECNs, because they fragment available liquidity. Eventually, some ECNs will either consolidate or go out of business, and just the ones with the bulk of the liquidity could remain, Schwartz said. Reaction to the news was mixed. One of the largest ECNs around, Island ECN, took it in stride, interpreting the new ECN and its high-profile owners as a confirmation of the ECN industry's growing clout. "We're really excited," Island President Matt Andresen told Dow Jones Newswires. "It's a tremendous validation." Andresen said he was particularly heartened to see names such as Schwab involved, firms that already have trading businesses of their own which could potentially conflict with an in-house ECN. When firms that may potentially have conflicts with ECNs move toward them anyway, that signals that the ECNs are just too important to ignore, Andresen said. He likened this to Merrill Lynch & Co.'s (MER) entry into the online trading business. Representatives for three other ECNs - the largest, Reuters Group PLC's (RTRSY) Instinet, Eclipse Trading and Archipelago - weren't immediately available for comment. The emergence of the ECNs has inspired much talk about the potential threat they pose to market makers and the established exchanges. But Kenneth Pasternak, the president and chief executive of the largest Nasdaq market maker, Knight/Trimark Group Inc. (NITE), sees things a little differently. In a conference call held Wednesday to discuss Knight/Trimark's second-quarter results, Pasternak said his firm's advantage over an ECN is its ability to guarantee liquidity and to provide immediacy in trading, areas where he doesn't see the ECNs competing as well as Knight/Trimark. Asked to comment on the new ECN, a Nasdaq spokesman said "the more participants we have in our markets, the better it is for individuals and participants. It adds liquidity." A Big Board representative wasn't immediately available for comment.