In an unheralded move, eight competing electronic communications networks have struck an agreement to work more closely together in providing online investors with better after-hours stock trading services. The trading systems – Archipelago LLC, Bloomberg Tradebook LLC, The Brass Utility LLC (BRUT), Instinet Corp, The Island ECN Inc, MarketXT Inc, REDIBook and Strike Technologies LLC – have signed a non-binding letter of intent to link up, making trading information and orders more widely available to investors outside of traditional market hours.
The firms hope to connect to form a transparent network that will give investors access to trading interest on participating electronic trading systems for Nasdaq and exchange-listed securities. The proposed link of the systems is intended to foster the kind of smooth and consolidated operation outside of traditional market hours that the Nasdaq and other markets provide during the trading day. Execution of customers orders is expected to become significantly more efficient through the partnership.
The move comes as electronic trading systems – due to their relatively low cost and speed in filling orders – have attracted an increasing share of the Nasdaq market and are expected to garner a significant share of trading in exchange-listed securities.
In a bid to keep pace with the increasing competition from alternative trading systems, the Nasdaq stock market announced yesterday that it will cut fees for its SelectNet automated trading system. Instead of charging the members $1 per SelectNet trade, the Nasdaq will introduce a triple-tiered monthly pricing scheme. Member brokers will now pay $1 for the first 50,000 orders placed, $0.70 for the next 50,000 and $0.30 beyond that.
Nasdaq’s members had been clamoring for the lower fees, a spokesperson told Reuters. As for the timing of the announcement, the spokesperson insisted the changes had been in the works for some time, although he admitted that the price cuts were indeed being implemented to address competitive pressures on the SelectNet system.
As for the proposed after-hours network, the terms for connectivity will be negotiated individually between each of the eight participating systems. In addition, the network will be non-exclusive, allowing the member firms to negotiate deals with other trading systems as they see fit.
