ECNs: Knight attains market data revenue opportunity
News that Knight Trading has agreed to acquire Attain, a small ECN, passed almost unnoticed as the securities industry's attention was focused on the New York Stock Exchange's dramatic decision to merge with electronic rival Archipelago, and on Nasdaq's acquisition of I-Net.
Although Attain's market share in OTC (Nasdaq) and listed (NYSE) stocks is not significant, the deal is interesting from a strategic viewpoint.
"Our goal for the new ECN is to provide a stable, fast, competitively priced and anonymous execution platform for trading of Nasdaq, exchange-listed and OTC Bulletin Board Securities," says Thomas M Joyce, chairman and CEO of Knight Trading Group.
The ECN will join Knight's direct market access product, Direct Trading, bought two years ago in the group's Electronic Services division.
Although it remains to be seen whether Attain can be built up to provide a credible challenger to the new effective duopoly, the deal could position Knight to benefit from Reg NMS's new rules on market data, and could be a model for others to follow.
The SEC's new rules on market data will allow both market centres and their members to profit from their data based on a new formula that will take into account the value of quotes as well as trades into the consolidated data stream.