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To: SCOOBEY-DO who wrote (58)	6/6/2000 2:11:00 PM
From: LPS5	Respond to of 98

Could Merrill's Takeover of Herzog Be The Beginning Of a Run On Order Execution Facilities Absolutely not. Herzog is a market maker, not an ECN, though they are involved in the construction of a new ATS, Primex Trading. Merrill has an investment in an ECN already, as well - Archipelago. In fact, that takeover is, to me, a sign that the largest brokerage firm in the country is seeing newfound possibilities in the dealer business, rather than in the electronic trading facility business. With decimalization looming and the further narrowing of spreads almost guaranteed, it seems a strange move, especially when Merrill cut back the number of issues it made markets in just 3 yrs ago. Perhaps the Merrill guys think that narrower spreads will weed out the smaller dealing entities, resulting in less, but larger, dealers with amassed capital strength in the future equity market(s). LPS5