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To: Rock_nj who wrote (91097)	8/25/1999 8:43:00 PM
From: EyeDrMike	Respond to of 119973

Ashton Technologies Plans Electronic-Options Market Philadelphia, Aug. 25 (Bloomberg) -- Ashton Technologies Group, a Philadelphia company developing a stock-trading system for the city's stock exchange, is planning to start an independent electronic options market next year. Ashton's NextExchange may take on the Philadelphia Stock Exchange's options-trading floor, the Chicago Board Options Exchange and two other established options markets. It also may partner with the Philadelphia, which trades options and stocks, or another exchange, Ashton officials said. ''We're not locked into a specific strategy,'' Ashton President Arthur Bacci said. ''How it gets deployed and whether we partner with people remains to be seen.'' NextExchange will initially go head-to-head with the International Securities Exchange, expected to be the first all- electronic options market. ''We will compete on several different levels and we will be different,'' said Fred Weingard, Ashton's chief technology officer. Universal Trading Technologies Corp., an Ashton subsidiary, is developing NextExchange and will apply for Securities and Exchange Commission approval within three to six months, he said. The ISE and NextExchange are planning to open amid unprecedented change in the options world. Federal regulators are looking into how options trade. Several lawsuits allege the exchanges collude by listing certain options on a single exchange. This week, competition grew more intense as the CBOE and the American Stock Exchange listed options on Dell Computer Corp., previously an exclusive Philadelphia exchange franchise. Average Pricing At the moment, Ashton staffers are focused on their volume- weighted average price trading system for the Philadelphia exchange. The so-called VWAP system, to be introduced Friday, is a crossing system to let securities firms and institutional investors place stock orders at 9:15 a.m. New York time, before trading begins at 9:30 a.m., and receive after the close the average price at which the shares traded. It's designed for index funds, foreign investors and quantitative money managers. Like many other electronic systems, VWAP promises anonymity, so investors can place orders without fear others will see those orders and trade ahead of them. It doesn't guarantee execution, however. A buy order for 1,000 shares of a stock is processed only when there's a corresponding sell order. Investment Technology Group Inc.'s Posit introduced average price crossing systems several times in recent years with little success, said Tony Huck, an ITG senior vice president. ''In this market, with the volatility, there was little interest in people being locked into a VWAP,'' he said. ''So much can happen in the course of a trading day.'' Weingard said his system mitigates volatility and that many institutional investors already have expressed interest. He said VWAP trading could garner as much as 15 percent of U.S. stock volume. Some securities firms already offer VWAP trading services. The VWAP system, four years in the making, cost Ashton more than $10 million to develop. The Philadelphia will charge between 1 cent and 2 cents a share for the service. Ashton will receive an undisclosed percentage. VWAP is the first product for Ashton, which sold shares to the public in 1996 and lost $14.3 million in its most recent fiscal year. Earlier this month, the company received a $20 million private placement investment from Rose Glen Capital Management L.P., a $500 million partnership that invests in public companies. Ashton rose 3/16 to 10 11/16. Aug/25/1999 19:53 For more stories from Bloomberg News, click here.