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Strategies & Market Trends : The Final Frontier - Online Remote Trading -- Ignore unavailable to you. Want to Upgrade?

To: TFF who wrote (9782)	3/11/2002 6:04:34 PM
From: Eric P	Read Replies (1) \| Respond to of 12617

I expect to see Instinet's market share continue to decline. I think that Instinet is facing the same problems that Direct Access Trading firms were facing 1-2 years ago, price competition. Two years ago, DAT firms were all charging $20 to 25 per ticket, and they were making money like crazy. Then, a few firms starting dropping prices to get market share... and the price cutting snowballed. Currently, most DAT firms charge $10 to 15 per ticket, and they are struggling to stay in business. Most of their ticket costs are going right back out the door to pay for clearing costs and software costs. As for Instinet, they are still charging 1.5 cents per share for executions. This is triple the cost that ARCA charges and even worse compared to the cheap executions possible through ISLD. These other ECN's are now offering a reserve size feature, which was previously an advantage that Instinet had that was attractive to institutions. Now, what's the advantage of using Instinet? High prices? I think the market will be better off having liquidity continue to shift to the most efficient (speed), most transparent, and most inexpensive ECN. As a result, I expect to see ISLD continue to grow at the expense of INCA. -Eric