Commentary

Tim Quast
Traders Magazine Online News

We're All HFTs Now

In this guest commentary, author Tim Quast looks back at the history of HFT and how the market has evolved to where many firms now fit the definition of high-frequency trader.

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January 1, 2001

Island and Feds Working It Out

By Sanford Wexler

Island ECN, which now accounts for 13 percent of Nasdaq trade volume, is confident it will soon become a registered stock exchange.

Now that a group, led by Boston-based private equity firm Bain Capital, has agreed to acquire a majority interest in Datek Online Holdings, regulators are looking more positively upon its application for stock exchange status.

Datek currently owns 85 percent of Island ECN. But once the deal is closed, Datek's stake will be reduced to under 10 percent. The investors are spending $700 million on the purchase.

The Securities and Exchange Commission is pleased that Datek will no longer hold a majority interest in Island, said Andrew Goldman, an Island spokesman.

Datek Online, based in Iselin, N.J., never recovered fully from investigations by the SEC and the U.S. attorney's office in Manhattan into its trading and lending practices. Datek scrapped plans for an IPO amidst the unwanted publicity. Two investigations of Datek's predecessor company Datek Securities are still in progress.

An Agreement

"We are very encouraged that the SEC responded immediately to the announcement [of the Island spin-off]," Goldman said. "It does address the most prominent issue that both we and the SEC agreed had to be addressed. Datek's ownership of [Island] was 85 percent and they had said we had to reduce that and we agreed."

"We have been pleased with the encouragement received from the [SEC] about our plans for this sort of diversification," said Island's president and chief executive Matt Andresen in a statement.