CORRECT: Mixed Results For New Stock Order Types At BATS, Nasdaq OMX
16 Giugno 2009 - 11:03PM
Dow Jones News
Moving to adopt what has worked for a competitor has helped BATS
Exchange gain market share in U.S. equities trading this month, but
the immediate results have been less clear for Nasdaq OMX Group
(NDAQ) as it tries a similar approach.
At the beginning of June both BATS and Nasdaq OMX launched new
order types that route stock trades through private liquidity pools
before they're sent onto other exchanges for filling - a practice
that has helped Direct Edge, a rival electronic trading venue,
boost its share of U.S. stock trading to 12.55%.
BATS officials reported a 1.1% bump in market share for the
first five trading days following the June 4 introduction of its
new "Bolt" order type, helping the Kansas City-based exchange close
the gap with Direct Edge, which unseated BATS as the third-largest
U.S. stock trading platform in April.
BATS' U.S. matched market share is currently about 11.1%.
Nasdaq OMX introduced its own version of the so-called "step-up"
order type on June 5, dubbed "Flash," but it has yet to show a
clear impact on market share.
The New York-based exchange operator's core market share remains
flat at approximately 20% month-to-date, while its Boston Stock
Exchange unit, which the company has used to introduce a more
attractive pricing model, has shown gains, bringing Nasdaq OMX's
total U.S. equities market share to about 21.3% month-to-date.
Nasdaq OMX officials noted that the Flash order type has been
available on the core Nasdaq market for only eight trading days,
and some Nasdaq customers are still coding their systems to access
the new order type.
Brian Hyndman, head of transaction services for the exchange,
said "we have received a very positive reaction so far."
The Flash order is one of several initiatives pursued by Nasdaq
OMX as it looks to reclaim lost ground in a bruising battle for
U.S. stock trade.
The exchange has seen its market share fall more than 6% since
December, while rival NYSE Euronext (NYX) has also seen business
funneled away; its month to date share came in at an estimated
28.5%, down from 34% in December.
NYSE Euronext has objected to the new order types adopted by its
rivals, raising concerns around price distortion and investor
confidence in a recent letter to the Securities and Exchange
Commission.
Still, NYSE Euronext officials haven't ruled out implementing
similar practices if competitive pressure warrants.
Chris Isaacson, chief operating officer at BATS, said his
exchange is in favor of the SEC evaluating the role of off-exchange
trading in U.S. equities market structure, and said its Bolt order
type is well within regulations.
"A good healthy market structure discussion is good for the
entire industry," Isaacson said. "We're in favor of the most
efficient market possible."
William O'Brien, chief executive of Direct Edge, said the flurry
of new order types has helped draw attention to his platform, which
looks to convert to an exchange by the end of the year.
"All these changes and competitive efforts ultimately help
people focus on the fact that how they did business in the past may
not be the best way to do it in the future," he said.
-By Jacob Bunge, Dow Jones Newswires; (312) 750 4117;
jacob.bunge@dowjones.com