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Wednesday, August 03, 2005

The Future of Institutional Trading

Just as the media business is being dissembled by the Internet, so too are the institutional trading markets. Here's a great post at The Barnes Log illustrating just how powerful technology-enabled businesses can be. The NY Times article he references discusses how LiquidNet has taken huge market share from stalwarts such as Nasdaq and the NYSE. In 4 years LiquidNet has gone from $0 to $1.8 Billion in value. All by creating an electronic trading network that is aligned with the customers' interests. Trading spaces such as LiquidNet and Pipeline allow customers to better conceal their trading intent and remove the risk that someone on a trading desk is leaking your moves to the rest of the market.
It will be interesting to see how the market reacts to NYSE's recent acquisition of Archipelago. Their latest quarterly announcement hints at a slowdown in Nasdaq.
Various stats from the electronic exchanges:
  • Pipeline hits a record 17.3MM shares executed in June, 2005.
  • ArcaEx ETF volume increased to 6.2 Billion shares in Q205 from 3.8 Billion in Q204.
  • LiquidNet's Average Execution Size for Q105 in Large-Cap shares was 58.8K shares.
Maybe this is why Wells Fargo decided to punt its institutional sales and trading business recently.

2 Comments:

At 8:02 PM, Blogger amotleyfool said...

Great blog! In case you haven't seen mine checkitout. it's arcaex.blogspot.com and it's all about electronic financial services with an emphasis on Arca.

let me know what you think!

 
At 1:09 AM, Blogger Belinda Gwen said...

May you prosper Anonymous! day trading future is a great reflection of your intricate knowledge.

 

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