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To: Jenna who wrote (1382)	1/10/2001 10:54:22 PM
From: Frederick Langford	Respond to of 6445

Nasdaq's SuperMontage approval to strike blow to ECNs By Mark Weinraub NEW YORK, Jan 10 (Reuters) - Nasdaq's SuperMontage trading system, designed to display the best buy and sell orders in a central location and automatically process stock trades, is set to strike another blow to the fledgling alternative trading systems, which fear being priced out as they struggle to attract buyers and sellers. SuperMontage provides Nasdaq traders with new features -- such as the ability to post trades anonymously-- that used to be available solely through the alternative trading systems, known as electronic communications networks (ECNs). The new trading system calls into question why ECNs are needed, said Robert Napoli, director of research at ABN Amro. "It does not make their life easier, that's for sure," Napoli said. "You do not need to go to an ECN as readily as you have in the past." On Wednesday, the U.S. Securities and Exchange Commission unanimously approved the controversial SuperMontage proposal by Nasdaq, the No. 2 U.S. stock market. The plan, originally unveiled in September 1999, went through eight modifications to respond to criticism and other public comment before getting the regulatory green light. SuperMontage displays the three best buy and sell orders available for any Nasdaq stock, as opposed to just one that is now visible on Nasdaq's current system. The system also lets investors see who is making the bids. But participants can also bid anonymously. The ECNs decide if they want their bids included in the system. ECNs, once the darlings of Wall Street, have fallen out of favor after a strong start, rustling up about one-third of the trading volume on Nasdaq in just a few years. But recently traditional share dealing services have come back into vogue, forcing ECNs to fight to improve their liquidity by working to lure more buyers and sellers. Most of the nine U.S. ECNs started in early 1997, after the SEC issued rules that forced Nasdaq market makers to post the best bids and offers on stocks, including those from private order-matching networks. The biggest ECNS are Island ECN and the ECN operated by the Instinet brokerage unit of financial news and data company Reuters Group Plc <RTRSY.O> <RTR.L>, followed by a batch of others, including Archipelago, Bloomberg Tradebook and BRUT ECN. SuperMontage, along with other developments such as decimalization or trading stocks in pennies rather than fractions, makes it less likely that an ECN will be able to match orders faster unless it has a deep pool of investors. "Between a combination of decimalization, the use of capital by the market makers and the reserve quantity, it will be awfully tough for a simple limit agency order to move to the top of the book," said Scott Saber, executive director in the equities division at UBS Warburg. The ECNs that thrive will be the ones that have made themselves important to the marketplace with their volume, Saber said. The remaining ECNs may have to consolidate. Decimal trading, which Nasdaq must implement by April 9, makes it harder for an ECN to match orders because there will be more pricing points available than under the traditional fraction system. The SEC ordered the shift to pennies, believing it will give investors better prices for shares. Most of the ECNs fought bitterly against SuperMontage. Instinet, the biggest of the bunch, said SuperMontage would give Nasdaq an unfair advantage and allow its market makers to step around orders posted on ECNs, even if they were displaying the best bid for a stock. But modifications to the final proposal that was approved by the SEC actually improve competition in the industry by limiting Nasdaq's monopoly power as a securities information provider or SIP, Instinet chief executive Doug Atkin said. "The SEC's approval marks a first step in the restructuring of the U.S. securities markets," Atkin said in a statement. "Instinet believes that adjustments to the proposal --- especially moves to sever the existing Nasdaq-SIP monopoly --- create, for the first time, the potential for true competition to exist between marketplaces trading Nasdaq securities." Archipelago also applauded the final proposal, saying that the anti-competitive aspect of SuperMontage disappeared with the SIP portion. Bloomberg Tradebook, initially opposed to SuperMontage, joined with Nasdaq after its eighth amendment to the proposal, which changed the way orders will be routed. 19:40 01-10-01

To: Jenna who wrote (1382)	1/10/2001 11:53:32 PM
From: Junkyardawg	Respond to of 6445

IMCL came out with news tonight on bloomberg. quote.bloomberg.com I have a thought here...it is clear to all of us that the nuts are going to get hammered tomorrow. I am thinking investors may run back into the bio stocks. We had an up day when CSCO was the dog of the market which is unusual. Maybe we could have an up day when the nut stocks get chopped down? Just a thought dawg