Paul Allen’s Vulcan Ventures Inc has made a $25m investment in electronic stock trading service The Island ECN (electronic communication network), acquiring a 12% stake in the company. New York-based Island operates an order-matching system that allows brokerages to electronically display and fulfill stock orders for both retail and institutional investors. It says it will use the Vulcan money to fund its expanding infrastructure needs, as well as to help defray the costs it will incur by filing to become a national securities exchange.
It intends to become a fully recognized stock exchange and will submit a filing for approval with the Securities and Exchange Commission later this year, it says. When the deal closes – which is expected in 60 days – Vulcan will become the third partner with an interest in Island, following last month’s investment by Waterhouse Investor Services. Island reckons the agreement with Vulcan will allow it to benefit from the investment firm’s network of technology businesses as well as raise the profile of the company.
Meanwhile, global financial giant JP Morgan & Co Inc said it is acquiring a 20% interest in Archipelago, the primary ECN for Nasdaq stocks. The investment represents Morgan’s first US foray into the arena and follows an investment in Tradepoint Financial Networks Plc, the UK-based ECN, in May. JP Morgan says it views Archipelago as a crucial part of its equities e-commerce efforts. Archipelago, along with The Island, is one of the original four ECNs approved in January 1997 by the SEC.
