Having already established electronic connectivity to all of the major European stock exchanges, NeoNet -- a Stockholm, Sweden-based broker/dealer specializing in automated exchange access -- is now taking aim at the U.S.-equity markets. Specifically, NeoNet has formed a partnership with SunGard Trading Systems/Brass to provide its clients with access to Nasdaq's soon-to-be-launched SuperMontage network -- an interface it plans to demonstrate at this year's show.
Currently, NeoNet provides its mix of institutional and broker/dealer clients with direct-electronic access to the orders books of stock exchanges based in London, Paris, Amsterdam, Brussels, Frankfurt, Stockholm, Helsinki, Copenhagen and Oslo. But the link to SuperMontage, which NeoNet will tap into via SunGard/Brass' Universal Market Access (UMA) front end, will represent NeoNet's first foray into the American stock market landscape.
Peter Gaffney, president of NeoNet's U.S. operations, says the broker would eventually like to provide a direct pipe to SuperMontage. In Europe, he notes, NeoNet is a member of all of the markets it provides electronic connectivity to. Those memberships, Gaffney says, provide NeoNet with the freedom to route customer orders directly to each exchange's limit-order book.
In the United States, however, NeoNet will initially route client orders to SuperMontage via UMA. The SunGard/Brass front end, says Gaffney, will also enable NeoNet to send its customer orders to a variety of electronic-communications networks, including Island, Instinet, Archipelago/Redibook and Brut. But in time, NeoNet plans to break off its relationship with SunGard to provide its own direct access to U.S. markets. "In Europe, we send our customers' order flow directly to the exchange, with no intervention whatsoever ... (and) our goal is to eventually emulate what we do in the European markets in the U.S.," says Gaffney.
NeoNet will take a wait-and-see approach with SuperMontage, to evaluate how Nasdaq's order-routing and execution network is received, before it decides when it will attempt to provide direct connectivity. Gaffney says that since NeoNet has built a strong presence in Europe, the broker has the "luxury of seeing how SuperMontage pans out" before deciding to build direct access to the platform.
In the United States, NeoNet also plans to build direct interfaces to the New York Stock Exchange next year. Gaffney says that NeoNet expects to go live with connectivity to Designated Order Turnaround -- the NYSE's electronic-trading platform -- and the Broker Booth Support System -- the exchange's floor-based order-routing system -- by mid-2003.
Later this year, NeoNet is scheduled to go live with direct access to two more European exchanges: the Milan stock market and Virt-X, a pan-European equity exchange co-owned by the Swiss Exchange and Tradepoint.