| Headline: Equity market structure - Back to the Buttonwood Tree Source: Euromoney Date: June 2000 Author: Clare Nickson, Maryana Shteyman For years the equity markets, especially in the US, have been inefficient and run in the interests of a select few. But new technology has allowed new players, such as electronic communication networks, to challenge the established hierarchy. Is this a revolution, or is technology returning market structures to pure enablers of trades, as they were when the New York Stock Exchange was established under a Buttonwood tree in 1792? The market faces fragmentation followed by rapid consolidation. Clare Nickson reports The issue of market structures is a growing topic of discussion. The traditional exchanges are the creation of their users - firms primarily concerned with access to centralized pools of liquidity derived from their clients and their proprietary orders. However, despite this access, problems within the exchanges have led to the development of alternative market centres, including ECNs (electronic communication networks). The combination of technology, regulation, and competition from ECNs will drive changes in the structure of the exchanges. The search for liquidity is placing the European exchanges under increasing pressure to consolidate, (for example the London/Frankfurt merger, and the Euronext alliance between the Paris, Amsterdam, and Brussels exchanges). |