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

To: Zeev Hed who wrote (1442)	5/30/1999 8:52:00 PM
From: mst2000	Read Replies (2) \| Respond to of 4443

Great question as usual, Zeev. I think lack of intellectual property protection, and the barrier to entry it creates, is an issue for ATG. But there are at least a few considerations worth noting: First, though the hardware and software can be reverse engineered, and has no patent protection, there still would be a timing issue in terms of system development and deployment, as well as a regulatory issue with timing implications in terms of deployment. Though Reg ATS has loosened up on what companies can do to introduce ATS systems, they still need exchange affiliation to launch on a pilot-notice basis (e.g., without review), and are subject to SEC oversight on a case by case basis. Given the SEC's scrutiny of VTS (which was formidable and time consuming), it is unimaginable that other "identical" systems would be introduced like lightning. PHLX is contractually bound to ATG (through its sub UTTC) to launch the system subject to regulatory approval. While additional regulatory delay is possible for ATG even at this point, I think the regulatory issues affecting a new entrant would be far more formidable. Also, NASDAQ has already committed to Optimark, which is a competing but far from identical system for providing institutions with anonymous trades and fairer executions, and to avoid frontrunning. In the end, I accept that ATG's ultimate success is far from guarantied, and that competition will be the rule, not the exception. Nothing is a lock in this world. But I question whether it is really in any competitor's interest to create a directly competitive mirror image system and given the way it operates, I believe that deployment of such a system is not a "snap of the finger" event. A 1-2 year head start is an eternity in this industry the way it is evolving at the moment. So they seem to have a leg up, at least for the time being, with regard to VTS. Of course, if they succeed in deploying the other electronic trading systems they have had in development over the next year or two (an important IF), they should be able to generate some good revenue even if VTS by itself does not prove sufficiently profitable to build an entire company around. My view has always been a long term one, and certainly not dependent on VTS alone - but I have always viewed the successful initial deployment of VTSas a critical hurdle for ATG. It's looking pretty good right now, but I sure would like to hear a definitive announcement from the PHLX on the deployment date. MST