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

To: xbrent who wrote (2784)	7/26/1999 4:38:00 PM
From: Herschel Rubin	Respond to of 10027

Morgan: <<I know many times MMs play such games, shorting stocks to death, because they know shares are coming on the market. >> Yes, however as the price declines into the $45 range, one would think formerly locked up insiders will be less and less inclined to sell. Insiders who were holding through the recent highs of $81 may not be satisfied with $45 unless, for some reason, they've lost all confidence in the company. Xbrent: <<NITE will have lower margins because of ECN's.>> Read the Barron's article I posted earlier. It remains to be seen whether NITE will have lower margins due to ECN's. ECN's will probably result in NITE losing SOME of its volume in the 50 largest Nasdaq stocks, which, according to Pasternak, is NITE's LEAST profitable business. If anything, NITE's margins will probably go up due to ECN's. Then we might ask whether ECN's will decrease NITE's net revenues... That also remains to be seen if NITE partners WITH ECN's as discussed in the conference call. Finally, consider the following paragraph from the Barron's article: "The doubters say that competition from ECNs will narrow the profits of the Street's traditional middlemen like Knight/Trimark. But with electronic order handling, trading volumes will soar, even if order-handling margins shrink. Instinet CEO Doug Atkin says that should enable efficient market makers to grow their total profits as the pie grows." Xbrent: <<Also as the markets trend downward this quarter, overall trading volume will decline also and further decrease NITE's profits.>> How do you know trading volume will decline when/if the markets go down? It is not necessarily a foregone conclusion. Market selloffs have been often associated with an INCREASE in volume. True, NITE does poorly in a stagnant market such as we see in a recession. This market may have significant volatility going forward. <<The average electronic trader will stay out of the market until the slide is over. >> How does the average electronic trader know when the slide is over? Many e-traders are continually trying to buy the bottom and trade into declines. I'm not convinced they stay out of the market when they really should. BTW, as of today, the Nasdaq has corrected over 8% since it's recent all time high.