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To: Testy_Coles who wrote (3248)	8/8/1999 1:34:00 PM
From: Joseph Silent	Read Replies (1) \| Respond to of 10027

Testy ---- I'm sure Morgan and Herschel can give a more detailed answer. In brief, ECNs cannot "execute" if they cannot match a buyer and seller. This is the "liquidity" problem. When they can't execute locally, they route to someone else (like NITE). Who the potential targets can be is beyond me at this point (e.g., other ECNs too?) The problem is that any delay in the process will cost the investor some price movement. An investor who sends an order must always assume that price is moving against him and not for him. So the faster the better. NITE is faster than an ECN. ECNs are mulling over the idea of becoming exchanges. I think Instinet is already trying. They'll now have all kinds of regulations to contend with. Will NYSE and Nasdaq let them? Hope this helps a bit. Joseph

To: Testy_Coles who wrote (3248)	8/8/1999 3:51:00 PM
From: Gary Korn	Read Replies (1) \| Respond to of 10027

With respect to ECN encroachment, Merrill's analyst believes that it will ultimately be limited: Despite strong growth in ECNs, NITE has continued to improve market share of Nasdaq volumes; also, we believe ECN volumes are concentrated in large cap stocks, which represent only 10% of NITE's order flow. . . . We believe ECN growth has resulted from business that the firm [NITE] was not actively competing for. . . . Future growth of ECNs will affect only a small portion of the firms business. ECN-anguish may therefore, in Merrill's view, be "overblown" (using Merrill's words). Gary Korn

To: Testy_Coles who wrote (3248)	8/8/1999 11:15:00 PM
From: LLCoolG	Respond to of 10027

Testy, That is exactly why there is a usual 5-10 minute holding period, during which the ECN can make the trade. They can match it to an order in their book, with the spread, or go to another exchange, with the spread. It is a shell game, and they have done a great job in not fully disclosing just how ECNs actually operate. It is not the most efficient. It may be the cheapest commission, but the buyer and seller pay just as much, and probably more, just like e-traders who use the "cheap" market orders do, unless it is during thre trading day. Any broker, including the IR from NITE, will tell you this. G