Discussion in 'Order Execution' started by NasdaqTrader, Nov 16, 2002.

  1. Anyone know if ARCA interacts with AMEX on nasdaq trades?Anyone also know if ARCA sends orders to Supermontage to trade with MM's and all ECN's?
  2. OES has lines for Amex OTC.

  3. ARCA doesn't know what they do ...
  4. The interaction with AMEX and secondarily some weird interaction with SuperSOES both seem highly problematic, especially in fast markets. I have to do a little more research on the subject, but for the moment I'm avoiding ARCA, including all routing schemes that employ ARCA, especially in markets where AMEX is acting as OTC specialist.

    It obviously doesn't help that ARCA has been having problems all its own of late.
  5. came out a little garbled - but you know what I mean: where an AMEX specialist is active and present in and around the inside market... whatever... been a long day...
  6. I had a problem yesterday where a buy stop was not triggered on an OTC stock. IB customer support informed me that the trades I saw going off were through AMEX and since those AMEX trades are phoned in and not electronic that IB did not recognize them. Apparently AMEX has recently started to make a market in some OTC stocks. All I know is that all these routing details coupled with breakdowns at various exchanges at various times has my head spinning.

    The potential for profiteering with knowledge beforehand of any such breakdowns must be enormous.


    "coincidence is the word we use when we can't see the levers and the pulleys."
    - Emma Bull, Bone Dance
  7. What's the price for ECN Archipelago?
    Market still too crowded with three players, CEO says
    By Bambi Francisco,
    Last Update: 7:34 AM ET Feb. 25, 2003

    SAN FRANCISCO (CBS.MW) -- If Nasdaq buys Archipelago, it might have to pay about $400 million.

    That's what the electronic trading network generates in annual sales, said Archipelago CEO and founder Jerry Putnam, in an interview with

    Archipelago -- or "Arch" for short -- is privately held, and has never publicly disclosed its sales. But by Putnam's analysis of market values, companies like his are worth about one times revenue.

    The easy math suggests that Archipelago, which raised $190 million since its inception in 1996 and spent about $50 million to build a global electronic network that's stolen trading volume away from Nasdaq, might just be picked up for the $400 million price tag.

    After a wave of consolidation in the industry last year, consolidation talk is heating up again.

    It's almost to be expected. There were nine ECN's in 1999, Putnam recalls, but the ranks have been thinned out as there were several mergers last year.

    This time, the talk is about a possible marriage of Nasdaq and Archipelago. Putnam didn't deny that there have been conversations, but elaborated only by saying: "There are three of us left. There is room for two. Somebody's going to want to do something."

    One of the three is Instinet Group (INET: news, chart, profile), which began well before Archipelago started hosting trades in 1997 and which merged with Island last year.

    Archipelago quickly emerged to be a rising star and recently boasted 400 million shares per day. On Monday, Archipelago handled a record 4 percent of the New York Stock Exchange trading, said Putnam.

    Combined, the Instinet and Island trading volume surpasses the volume traded on the Archipelago system.

    Reuters (RTRSY: news, chart, profile), which owns 63 percent of Instinet, just posted its largest loss in history. There has been speculation that Reuters might consider a sale of its stake in Instinet.

    If Reuters sells its stake, the whole company could essentially be put up for sale. And what's more, Instinet might be a willing seller.

    Consensus estimates for the company's 2003 results fell from earnings projected at 17 cents per share to a loss of 3 cents, due to

    higher expected expenses in the coming year, according to Richard Repetto, an analyst at Putnam Lovell NBF.

    The next chapter

    If Instinet were to be scooped up, what's to happen to Archipelago?

    Putnam scoffs at the idea of Nasdaq acquiring Instinet since it would be entail too much integration that would be both costly and resource-consuming.

    For instance, the combined companies would have 2,220 employees, said Putnam. Archipelago's 185 employees, if combined with Nasdaq's 900, would be half as much.

    By the same token, Archipelago may need to do some fast maneuvering if it wants to stay in the race.

    And that's exactly what Putnam is doing. His strategy is to build up the technology.

    Last year, Archipelago bought GlobeNet for an undisclosed amount. The purchase was to gain access to GlobeNet's technology, said Putnam, who was in San Francisco on Monday attending the Sun Microsystems (SUNW: news, chart, profile) technology conference.

    Putnam was outlining the rationale behind his company's purchase of a handful of Sun Fire systems to replace his company's hundreds. Sun's system will accept and book orders at 5,000 orders per second, and provide up to 500 simultaneous customer connections.

    While he didn't detail the return on this investment, Putnam said it was worth the cost of ownership.

    By taking the steps to improve Archipelago's systems, Putnam hopes to stay ahead of the curve with the newest technology to scale in volume and handle massive amounts of trades that the company hopes will shift over to its system.

    Shifting terrain

    Of course, the decline in trading volume overall has continued unabated, so Archipelago's banking on consolidating more volumes on its system.

    This is ostensibly a big challenge, perhaps sparking moves at additional consolidation.

    Putnam said Archipelago has been generating cash flow inconsistently and fell into the red in the fourth quarter. He attributes the loss to the initiation of fees the company had to pay out for trades to be listed on the system.

    Making matters worse, the company's fees received from trades made have been dropping.

    Prior to October, the company paid zero fees for a trade to be listed, and received 4 cents per 1,000-share trade. Now, it pays out 2-tenths of a penny for a stock to be listed, and receives 3-tenths of a penny for a stock that's traded.

    While the volume of trades in the final quarter of last year was three times what it was in the first quarter of 2002, so far in 2003, volume is back to looking "weak," said Putnam.

    "Over the last month, we're down from the fourth quarter," he said, adding with a reassuring tone: "But, not a lot."

    Putnam wouldn't disclose how much money the company had in the bank, only to suggest that it was sufficient.
  8. ARCA uses soup cans & string
  9. 400 million for arca?

    I bid 3 cents, that's you pay me 3 cents and I'll take it off your greasy little hands.
  10. funny! :p
    #10     Feb 27, 2003