|
Abstract
SuperMontage, the new order/ quote entry and execution
environment of NASDAQ, has been in the eye of a storm
ever since NASDAQ announced its plan to launch the new
trading platform. Much has been published about the
features of the new system and how it will affect the
ECNs. This white paper gives a brief overview of how
the stock markets have evolved in the US from an investor’s
perspective and existing trading platform used in NASDAQ.
It also compares the SuperMontage with the existing
systems.
Over the years, the trading models adopted by the exchanges/
OTC markets in the US have not changed drastically,
though efforts have been made to leverage the advances
in technology to the fullest. Forced by a stiff competition
from ECNs and declining market share, NASDAQ has announced
its plan to rollout the SuperMontage. This system will
transform NASDAQ from a regulator/ quote collector to
a competitive market place.
SuperMontage has many new features like auto-execution,
multiple price-point entry, and flexible matching criteria.
But it also changes the business model of NASDAQ from
a regulator to a mammoth ECN itself. SuperMontage promises
to consolidate the liquidity in OTC markets into a single
trading system, thereby providing investors with “mother
of all markets”, to route their trades to. However
the competition between ECNs and NASDAQ will take its
toll on liquidity and trading volatility before clear
winners emerge. Investors who want to see lowest market
impact cost and trading cost may not have easy times
ahead as they are left with finding out the right avenue
with maximum liquidity each time they decide to trade.
Thus launch of SuperMontage adds an interesting new
twist to the fast changing world of stock trading in
the US and coming months could witness a pitched battle
between the ECNs and NASDAQ over the stock trading business.
Author
Mandar Joshi
To know more about Wipro in finance, go to www.wipro.com/finance
|
