Is there a future for trading platforms

Frankfurt, London and New York
The notion of «marketplace», so often used in the financial world, threatened by oblivion. The reason for this is the transition to new technologies and pervasive kompterizatsiya. The fact that today is a NYSE or NASDAQ, tomorrow could be a memory.

In early August 1999, the London Stock Exchange (LSE) has announced the suspension of rights of ownership of stock exchange members and the transition to the status of joint-stock company. This event was preceded by similar statements made by the two largest stock exchanges the world - the New York Stock Exchange (NYSE) and NASDAQ (Nasdaq). Their actions are just repeating the steps of Sydney Stock Exchange, made a year earlier.

Stock exchanges are scared, and rightly so. With the advent of cheaper alternatives such as electronic communication networks (ECN), customers are increasingly abandoning the old, time-tested methods of work. Exchange to lose customers and face a choice: either accept the new terms of "game", or turn into memories. Problem exchanges - that they continue to keep the spirit of the past, in which the procedure for the adoption and enforcement of decisions is often too slow and quite conservative. And all because the majority of participants were interested in preserving the status quo. In turn, this allows you to understand why the world's largest stock exchange so slowly moving away from trading at the site of trading for the monitor. Sometimes they refuse to innovate, despite the obvious benefits - the opportunity to expand the range of offers cheaper products for greater range of consumers. This is exemplified by the events of 30 July this year, when members of the London International Petroleum Exchange (IPE) abandoned the new conditions, "the game".

Do not remain on the sidelines and exchange alliances. Last year it was announced that the joint LSE and Deutsche Borse to create a European trading platform. Problems arose as to the trading system itself, and the decision on the form of ownership and management of the project as a whole. Deutsche Borse is not only one of its kind committed to the old values of others faced with the risk of being sequestered ECN and more than enough to own an electronic network. Partly they are right, because the ECN had not yet received widespread publicity and distribution in Europe. Although they would be worth looking at it from the other side. After all, it was the same reason that ECN had a strong start in America. The main question was not changed whether the ECN market, but how they do it.

Internet trading has ceased to be the prerogative of individual traders. E-revolution is already changing the very nature of the market. The only significant limitation of the rapid development of ECN is listing shares in Nasdaq. ECN, formed by brokers, such as Island and Archipelago, have been stolen from the turnover of traditional market-makers huge volumes of transactions.

Capture all the NYSE were not allowed by law: for this they should be exchanges.
Last year the Commission for the Securities and Exchange Commission (SEC) has introduced new rules allowing for the use of ECN as an analogue exchanges. This immediately took advantage of Archipelago and the Islands. In addition, SEC forced the NYSE to reconsider some of the rules relating to monopolization of the market sectors. The only thing left is to redefine the requirements for the regulation of exchanges. Already, ECN, seeking to become the stock exchanges were forced to spend this huge sum of money. Their desire is due to a desire to get one of the exchanges and get the right to control financial flows.

The decision of NYSE and Nasdaq on the reorganization and acquisition of companies is due only pressure from the ESN. Complete replacement of the management of its members to exchange less bulky structure of the joint-stock company - that, as already have been content ECN. Huge investments in new technology - only part of the measures taken to ensure that not only reflect blow ECN, but also keep the leading position in controlling the flow of all financial securities in the global electronic marketplace.
The main competitors in this battle are the major financial institutions and companies managing the funds. The largest of these have already been recognized as a global operator.

Goldman Sachs is the most active on Wall Street. The company has invested in the Archipelago ECN, the investment in online bank Wit Capital, in unique in the complexity of an anonymous electronic trading system, developed jointly with Merrill Lynch, as well as to Madoff Securities, a futures broker's influential New York. Morgan Stanley and Citigroup are also planning investments in the Primex. In July, Goldman Sashes acquired another large futures broker - the company The Hull Group.

Companies from Wall Ctrit easily relate to the fact that they have no idea how it ended. Their choice - strive for zero risk, that is to find as many baskets to accommodate its golden eggs. In such markets there is no choice. All they can try to do - is to continue to defend their only basket. Will the they do?

Stock exchanges are no longer able to keep the client alone, its good reputation. They must offer competitive conditions. Otherwise, their main advantage in the form of trade leak in cyberspace, and to restore the status quo is already quite difficult. There are fears that financial institutions will simply ignore the market, making the transaction directly. Such practices, informally, to enjoy the world financial market for many years. For example, the world's largest financial institution Barclays Global Investors (BGI) is trying not to use the services of brokers without a specific need. Scope of operations carried out through them, is overlapping the parties concerned in the transaction, and subsequent formal notification of the Stock Exchange of its completion. Not so long ago, 19 investors, the largest financial institutions have established an organization called E-Crossnet. Users set up the network, who want to buy or sell shares of the English, no need to put a warrant on the stock exchange through brokers. Just contact the contractor via the network. This practice exists in America. Although the U.S. company ITG, the owner of the network Posit, and allows brokeramdileram bid. Benefits of the new systems "overlap" provides an opportunity to save up to 80% of the value of the transaction. At the same time there is no excitement, "market shock" at the disposal of large packages on the market, as well as market spread with nakrutkami broker. In addition, significantly reduced the commission to the broker.

Once people thought that in order to maintain high liquidity in the market need as much traffic to the Exchange to participate in it, which, in turn, had to choose where to trade. Today, single investor, with his arms on the computer, is free to get access to many markets at once with any level of liquidity. Similar rates of technological growth inevitable. Perhaps the idea of the current restructuring of the major markets will add to them a little energy, but the past has not come back. In the same river twice did not come. We can only obey and follow the time course of its rules.