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Non-Tech : Ashton Technology (ASTN) -- Ignore unavailable to you. Want to Upgrade?

To: M. Frank Greiffenstein who wrote (3173)	1/19/2000 11:06:00 PM
From: mst2000	Read Replies (2) \| Respond to of 4443

DocStone: The "risk" is to the clearing agent in the following sense - because the parties to the trade are not known to anybody, the clearing agent in theory does not know whose credit it is underwriting, or how much of the credit which that party has is actually being tapped - and to make matters worse, the price on the trade is not known until after the close. So the clearing agent is put in the position of guarantying that a party whose identity it does not know will fill an X thousand share order of stock in a Fortune 20 company at an as yet undetermined price, which in most places would be considered a potentially unacceptable credit risk. On the other side of that equation, all parties precleared to use the ATG system will demonstrate some presumably huge level of creditworthiness before even being allowed to trade on the system (these are, after all, institutions) and apparently eVWAP has built into it some facility, an automatic mechanism as it were, that sends an electronic message to the clearing agent informing it that its customer A is making a trade with a probable value of X dollars, without compromising anonymity (presumably, no human sees it, or it lacks specificity at least to the extent that the clearing agent does not know in what security the trade is being made, but I'm not sure - management indicated at the annual meeting that eVWAP addresses the concern automatically -- that the mechanism was designed into the system from the get go). I think the credit risk, ironically, is most acute with the smaller users, since the largest users (the Vanguards, Fidelities, CALPERS, et al.) have so much credit and legitimacy that credit is not that big a concern. One last thing - the difference with eVWAP and Optimark on this issue is huge - eVWAP had the automatic mechanism to address the concern, and trades orders matched before the open (quantity st up front) at a price likely to be within a certain range - the credit issue can be assessed by 9:20. Optimark, on the other hand, involved orders being filled during the trading day, on an ongoing basis, for customers who might also be placing orders in the traditional fashion, and in quantities that adjust as the day progresses using the Optimark patented algorythm. Apparently, they did not have the automatic mechanism. They still have not fully resolved the issue with the Clearing Agent groups and the SEC. Hope that helps. MST