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To: Redmond Quain who wrote (8110)	3/31/2000 9:04:00 PM
From: Dan Duchardt	Respond to of 12617

Redmond, The issue leading to the quote and comment that raised your question is not related to what goes on "inside" ISLAND. It relates to the fragmentation of the Nasdaq market with the numerous execution mechanisms simultaneously operating, including all the separately operating ECNs. Suppose for example you are trading a stock that is currently quoted 40 x 40_1/2 with NITE (or some other pay for order flow MM) asking 40_5/8. You are willing to sell at 40_7/16 and send your limit order to ISLD, thus establishing a new inside market. Now some customer of NITE is willing to pay 40_7/16 and sends an order (via his broker) to NITE, who decides to fill that order at YOUR price of 40_7/16 even though his best offer is 40_5/8. You are left without a sale, even though you were the first in the universe to offer stock at that price. Unfair to you?? Maybe so, but that's how it works. Dan