Venues Fight for Market Share

Boston-based Aite Group predicts that competition among market centers, along with structural and regulatory forces, will alter the shape of the U.S. equities market by 2010. According to Aite, as of Q2 2006, the NYSE Group and Nasdaq together account for 78 percent of the U.S. equities market, with more than 20 execution venues duking it out for the remaining market share. However, over the remainder of the decade, Aite says, the market will experience a shakeout and the two Goliaths will lose market share.

By 2010, the NYSE Group and Nasdaq will lose ground, accounting for 65 percent of the overall market. Fueled by broker-dealer investments and the introduction of innovative products and services, regional exchanges and alternative trading systems (ATSs), however, will capture as much as 17 percent of the equities market, according to Aite. Broker internalization and electronic crossing networks will account for the remaining market.

But the market will not be able to support the number of venues currently active today, Aite adds. Of the 20-plus players in the U.S. equities market, Aite believes that only four or five will be legitimate contenders by 2010. <<<