Brokerage Consulting Services:ECN ATS

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ECN ATS

Alternative trading systems, known as ECNs, have become integral to the securities markets, providing enhanced flexibility and reduced trading costs, as well as competition to the established securities exchanges and the Nasdaq Stock Market.

In 1999, ECNs account for approximately 30% of total share volume and 40% of the dollar volume traded in Nasdaq securities. ECNs account for approximately 3% of total share and dollar volume in listed securities. In contrast, in 1993, ECNs accounted for only 13% of share volume in Nasdaq securities and only 1.4% of listed share volume.

The vast majority of ECN activity currently involves trading in Nasdaq securities during regular trading hours. In 1999, an average of 93% of ECN share volume was reported to be in Nasdaq securities. Approximately 96% of ECN share volume in Nasdaq National Market System ("NMS") securities was effected during the regular trading session from 9:30 a.m. to 4:00 p.m. The overall level of ECN activity in listed stocks remained relatively small in 1999, and around 26% of this share volume was effected in the after-hours market. In 2000 and continuing this year ECNs grew volume and market share even as consolidation has started to occur.

ECNs and your Broker Dealer:
B/Ds are signing up every day with one or more ECNs. Have you updated your procedures manual to comply with the issues surrounding both internal and client use of ECNs? Do you now need a series 55 trader and does your OTC supervisor require a series 55? Each B/D will have different answers; we can ensure yours are correct and that you are not over regulating yourself. We can also provide consulting assistance to help you integrate an ECN into your business.

Are you ready for Redibook but confused about the difference between Instinet, Island, and MarketXT? Have you been sending orders to Knight and the Chicago Stock Exchange and seen your rebates disappear? Is your trading department complying with the order handling rules and its best execution requirements? Are your written trading procedures current and do they represent your actual daily procedures? We can answer your questions and ensure that you receive advice and analysis that is unbiased, not focused on a venders needs. Wonder why everyone else is using an ECN as part of their OTC business? Give us a call.

Information

ATS: If you are now allowing access to your internal trading systems to clients or other B/Ds you might be required to register with the
SEC as an ATS (Alternative Trading System). Brokerage Consulting Services can answer your questions and help you file form ATS if required even establish your written procedures if necessary and help with the SEC required procedures.

All ECNs are required to register as an ATS or Exchange, but not all ATSs are ECNs. If you are operating a trading system that clients or other broker-dealers have access you may be required to register as an ATS, if you are not sure call or email us.

Questions?

As a service to our customers and prospects Brokerage Consulting Services will provide you with "the short answer" to your securities industry related questions. Just click here and and type in your question. We will answer by email or phone. If the question falls outside of our short answer constraints we will also offer other solutions for you to get an answer.