Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Gary Korn who wrote (4965)	10/13/1999 9:32:00 AM
From: Gary Korn	Read Replies (2) \| Respond to of 10027

CC cont. KP: How can NITE compete with ECNs? Keep in mind, majority of ECN volume is in 100 most active stocks. Even there, they don't have dominant market share. MMs execute over 70% of NASD volume. NITE has grown market share faster than all ECNs combined over past year. MMs commit capital, providing liquidity. NITE is a wholesale market, providing immediate execution of all transactions. We take the other side where there is no counterpart. Limit orders on ECNs are only executed if there is a counterpart. 50% of all NITE trades are computer matched, like an ECN. Unlike an ECN, we don't charge for the service. So, there are reasons for both models today. 2nd topic: After-hours trading: Personally, it is still very embryonic. Lacks pricing transparency. No liquidity. When market provides regulated environment, pricing transparency, acceptable execution, NITE will participate. This will occur early in 2000. This market could have 5 to 15% of daily market volume and be an advantage for NITE. Q&A Now: Q: Ad expenditure (this is gbh question)? A: About 2.5 to 3MM in 3Q. A lot of it is front-loaded, pre-buy. Q: How much of your margin compression was due to shift in mix vs. breakdown in risk mgmt (i.e., limits on what traders can do). Could you go thru issue? A: There was no breakdown in risk mgmt. Actually, we had lower intra-day limits because of lower volatility. So, average consumption of capital was markedly lower in Q3 than Q2. Less trading loss days in Q3 than in Q2 or Q1! So, factors for less money were 3: 1. Lower volume, 2. Little volatility. Anecdotal: JNPR. Moved 35 points intraday. We averaged 20cents a share trading it. Would have still made that amount trading in decimals. Worst kind of stock for us is a stock that has massive volume but doesnt move all day. Q: NASD moving to central limit order book. Impact on NITE, with your own propriety limit order book? A: We dont currently have an advantage over other MMs vis a vis what we see. The only advantage is that orders away from the top of the book. Not a major component, tho, to our trading methodoligies. So, a slight negative. On the other hand, a slight positive since shifting limit orders over. Also, there is a proposal for MMs to charge limit order handling fees, along with that NASD proposal. So, there is real possibility that we could, at least, compete fairly on a fee basis with ECNS. Currently, at least 50 percent of our orders are matching FOR FREE! So, this would have an impact.