Advances in ECNs
strike
Strike Technologies, launched in mid-winter, uses a JAVA- based, Web-centric applet, which runs on NT or Unix. Strike runs on Sun Microsystem servers with standard connections to the National Market System. Strike is open to all credit worthy institutions, professional investors, market-makers and broker/dealers. It plans to offer a sliding scale fee-structure, based on cost-per-share of volume. "You never have to pay unless you actually use it," says Stanley Sakellson, Chief Technology Officer, Strike. Strike provides no additional analytics.
attain
ATTAIN, owned by All-Tech Investments, runs on any Pentium desktop equipped with Windows 95, 98 or NT and 64 meg of memory. "Order entry is not a heavy processing procedure," explains Bob Lerner, All-Tech. The subscriber's order can match internally while non-subscribers, using SelectNet, can preference ATTAIN. ATTAIN is aimed at the broker/dealers with retail or day-trader clientele.
brut
Brut is billed as an OTC trading system for OTC market makers. BRUT is similar to Bloomberg in that it has risen to prominence on an installed client-base. Most Brut users are members of Brokerage Real-Time Applications System Software (BRASS). Brut uses the BRASS data-feed and updates trade executions in BRASS P&L. Non-BRASS Brut users must lease a private line and purchase a Sun Microsystems server, along with routers, hubs, and other connections.
Broker/dealers are charged up to a penny per share. Those that place orders on Brut's book receive a rebate of 10 cents per 100 shares, up to $1 maximum. Pulling liquidity out of the system, costs $1.50 for 100 shares, $3 for 200 shares, and $4 for anything over 300 shares.
redibook
REDIBook is the ECN launched by Spear, Leeds and Kellog (SLK) to support its proprietary computer interface called REDIPlus. REDIBook was developed for speed and redundancy. The inhouse system was designed on an IBM RS6000 to run data centers in New York and New Jersey. Redundancy levels go beyond other SLK systems, with servers running on an OC-12 network between two buildings with generators and an uninterrupted power supply which pop to batteries. The REDIPlus, workstation, allows customers to connect to various exchanges and intergrates order routing to the NYSE, Amex, SelectNet, SOES and Nasdaq.
nextrade
NEXTRADE emerged out of the "lack of point-and-clickness of Nasdaq," says ceo Mark Yegge. "We wanted to make a system that was easier to use than Nasdaq but retained that functionality of hitting market makers or top-of-book in other ECNs." The API downloads over the Internet and then ties directly into any server. "Users can download the front-end, connect to their server, and be up in twenty minutes." Trades can get matched inside the NEXTRADE, book or be immediately advertised through SelectNet and the Nasdaq montage. A preference for thin-client configuration tipped NEXTRADE away from complex analytics, though users have add-on functions available. NEXTRADE also sports a rebate program for those who put liquidity into the system.
archipelago
Traders access Archipelago either using RealTick III, a Windows based trader's workstation, the FIX protocol or other commerical order entry systems. RealTick III requires a least Pentium 6, 300 mghtz PC workstation running Windows 95, 98 or NT with a minimum of 64 meg of memory.
Though it is not Web-based, Archipelago uses the Internet as a network. "There are more workstations doing that than anything else," says Stuart Townsend, president of Townsend Analytics, an Archipelago investor, "but proportionately, greater volume comes over frame relay through the institutional participation."
Townsend estimates that about a third of its volume comes from broker/dealers trading for their own accounts, one third from institutions, and the balance from individual traders or private customers of broker/dealers.
Archipelago takes order it cannot cross on its own book to "the national market" with direct connections to Island, Instinet and SelectNet. This means that an order that would otherwise be rejected or languish on the internal book is executed immediately.
instinet
Instinet generally runs off a dedicated workstation displaying a simple front-end and a complex back-end. "You need a tight, secure network and flawless software to run it effectively," says Mark Bobseine of Cutter Associates. Instinet, which classifies itself as a global broker rather than an ECN, has added an important new feature with FIX compliance.
"Unbridled access and speed coupled with liquidity are key advantages of Instinet," observes James Lee. Out Instinet volume has peaked as high as ten times the pre-FIX levels. Most Instinet terminals have been manual, but the introduction of FIX protocol has facilitated a shift to electronic order routing and management. "It is more seamless and helps remove errors," asserts Lee.
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