Profiling the ECNs

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Celent have reviewed this profile and believe it to be accurate.
9 May 2000


Cambridge, MA, USA, May 18, 2000

Report published by Celent Communications

Electronic communication networks (ECNs) have rattled the boards among market makers, with competition growing feverishly among them. However, gaining market share on the Big Board is still eluding ECNs. For the foreseeable future, ECNs will continue to struggle in attracting order flow from stocks listed on the New York Stock Exchange (NYSE), accounting for approximately nine percent of NYSE-listed trading volume by 2003.

Members of Celent Communications Institutional Securities & Investments research service can be download this report electronically by clicking on the icon to the right. A Table of Contents for this report can be viewed online.

The SEC, Nasdaq and large Wall Street firms have directed their focus toward formulating a coherent market strategy towards the creation of a central limit order book. Amid this uncertainty, ECNs will seize the advantage and continue to gain market share in Nasdaq trading volume, representing over 50 percent of all Nasdaq trading share volume.

In a new report, , Celent Communications examines those ECNs that have continued to capture increasing share, currently accounting for more than 30 percent of all Nasdaq trading volume. This report provides an in-depth analysis of each ECN, examining the business and technology strategies that have propelled them into the spotlight.

ECNs have moved beyond functioning as a mere dumping ground for unmarketable limit orders and have established themselves as a major force Nasdaq, noted Sang Lee, an analyst for Celent. While Instinet still remains the ECN to beat, the race for increased market share is heating up. Island, which once held a comfortable margin as the second largest ECN, is losing some of its market share as REDIBook, Archipelago, and BRUT have emerged as serious contenders.