The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site. Please see our Subscription Terms and Conditions.


All material subject to strictly enforced copyright laws. © 2021 Euromoney, a part of the Euromoney Institutional Investor PLC.

ECNs and Nasdaq slug it out

The five-year battle between Nasdaq and ECNs is heating up. Nasdaq launches SuperMontage in July, a worthy rival to the ECNs’ trading systems that could win back dealflow. Meanwhile ECNs are depriving Nasdaq of crucial revenue. Is this the start of the trading endgame?

One of the main information pages on Nasdaq's market data website gives rise to a bit of a shock. After several years of building market share in handling buy and sell orders in Nasdaq stocks, Island's slice of the pie appears suddenly to have all but disappeared.

Its share of trade volume had breached 20% by September last year and stayed there until February when it dropped to 17.6%. By March, though, Island accounted for just 3.3% of Nasdaq trades, and by April this was down to 2.8%. Its proportion of dollar and share volume suffered similar falls.

On the face of it, this looks like a disaster for a firm that had been the fastest-growing electronic communication network (ECN) in trading Nasdaq stocks. Perhaps its core customer base - retail investors - has dried up? Perhaps it's had a technological catastrophe, or is under investigation for some alleged crime - after all, who isn't? It would certainly offer one explanation why there are renewed rumours about Island being bought by rival Instinet.

There's a much more simple explanation: starting in February, Island started to report most of its trades on the Cincinnati Stock Exchange, an all-electronic regional exchange based in Chicago.

You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.

SUBSCRIBE ONLINE TODAY

Unlimited access to Euromoney.com and Asiamoney.com

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually

FREE 7 DAY TRIAL

Unlimited access to Euromoney.com and Asiamoney.com, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors

LOGIN NOW

Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree