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February 1, 1999

At Deadline

By Select Reporter

Lindsey Hire

* Richard Colby, deputy director of market regulation at the Securities and Exchange Commission, is the early favorite to succeed Richard Lindsey as the SEC's top enforcer, a source close to the SEC said. Lindsey is stepping down as director of market regulation to assume a senior executive position at the clearing subsidiary of Bear, Stearns & Co.

The source confirmed published reports naming Colby as one of three possible successors to Lindsey.

Lindsey is expected to begin at Bear Stearns Clearing Corporation in March, as a senior managing director and second-in-command to Richard Harriton, who heads the unit. The two other candidates named are Annette Nazareth, a counsel to SEC Chairman Arthur Levitt, and Belinda Blaine, the associate head of market regulation at the SEC. The source said the SEC was expected to select a candidate from the organization, with Colby as the logical choice. The SEC declined to comment on potential candidates to succeed Lindsey.

OptiMark Launch

* The OptiMark Trading System was finally launched as a facility of the Pacific Exchange (PCX) on the last trading day of January. OptiMark began trading just one stock, Minnesota Mining & Manufacturing, at 9:40 a.m. (EST) on Friday, January 29. A total of 114 firms were eligible to trade on the first day. Volume figures from OptiMark were unavailable at press time. OptiMark Technologies, the Durango, Colo.-based operator of the matching system, expects to have 100 more stocks trading on the system this month. The system's debut was helped by an agreement between OptiMark and the New York Stock Exchange on access to the Intermarket Trading System (ITS). The NYSE had objected to the PCX plan to send unmatched OptiMark orders to other exchanges over the ITS.

Last month, after negotiations between OptiMark and the NYSE, the ITS voted unanimously to include OptiMark in the PCX link to the ITS. Under an agreement with the Big Board, residual OptiMark orders will initially be given access to the NYSE through the ITS. Later, access to the NYSE will be provided by the Big Board's SuperDOT system. OptiMark's ITS volume will be capped at 15 percent, dropping to ten percent once SuperDOT access becomes available.

Access Fees

* Nasdaq wholesaler Knight Securities said it is considering sending a no-action letter to the Securities and Exchange Commission for permission to charge counterparties a fee for accessing the dealer's bids and offers. The SEC currently allows electronic communications networks (ECNs) to charge fees to counterparties for accessing an ECN's markets.

Although Knight Securities is not technically an ECN under the terms of the order handling rules, it does provide electronic execution services comparable to an ECN.

People familiar with Knight Securities' plans said the firm is furious that Attain, the ECN run by Montvale, N.J.-based All-Tech Investment Group, legally challenged Knight Securities for non-payment of access fees to Attain.

Knight Securities contends that if ECNs have the right to charge access fees, so should ordinary broker dealers. Kenneth Pasternak, president of Knight Securities, said the firm will make a final decision on filing a no-action letter within 60 days.

AMEX Options

* With Internet stocks swinging wildly these days on its affiliated Nasdaq exchange, the American Stock Exchange is planning to list options on an index of 15 Internet-commerce companies.

The new index, which is slated to be launched this month, will compromise Internet companies that merchandise products on the web. The Securities and Exchange Commission recently approved the index.

The companies listed, which must have a minimum capitalization of $75 million, include E*Trade, and Preview Travel. What makes the index stand out is the special niche of the companies selling products. The index is not meant for other companies such as Internet equipment and service providers.

The Philadelphia Stock Exchange (PHLX), which is expected to join the National Association of Securities Dealers market of markets, launched an Internet-commerce index last year. The PHLX index is not considered to be as narrowly focused as the new AMEX index.