Boston, MA, USA
December 27, 2005
Evolving ECNs: The Alliance with Exchanges under Reg NMS
Report Published by Celent
ECNs are making significant inroads into
the domain of traditional exchanges, and technology upgrades and Reg NMS
are driving them even further. Rising from only fractional market share in
the late 1990s, ECNs now comprise over 60% of OTC share volume.
Technology upgrades and Reg NMS have put
electronic communication networks (ECNs) in the driver’s seat. According
to Celent, ECNs will continue to dominate over-the-counter (OTC)
securities trading due to new technology initiatives, while Reg NMS will
allow them to further penetrate listed trading. Reg NMS is changing both
how ECNs compete with traditional exchanges and other ECNs.
In a new report, Evolving ECNs: The Alliance with
Exchanges under Reg NMS, Celent explores how Reg NMS and new
technology initiatives are impacting ECNs. Celent describes the evolution
of the ECN industry, provides statistics on market share of each ECN in
OTC and listed trading, details ECN technology architecture and business
models (including ArcaEx and INET/BRUT), and predicts the future of ECNs
under Reg NMS.
"Once a separate category, ECNs
are now becoming indistinguishable from exchanges," says Octavio
Marenzi co-author of the report and President and CEO of Celent. David
Easthope, co-author of the report and analyst in the Securities
and Investments group at Celent, says, "On its face, Reg NMS appears
to favor ECNs due to its emphasis on the automation of trading. ECNs are
expected to make continued gains against the specialists. However, the
greatest overall impact of Reg NMS will be on the NYSE by forcing it to
adopt the electronic model in its recently outlined hybrid
structure."
The 31-page report includes 16 figures and
three tables. A table of contents is
available online.
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