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April 30, 2002

The Rebirth of MarketXT

By Peter Chapman

A surge in volume on MarketXT has propelled the once laggard ECN into the top ranks of Nasdaq trading.

MarketXT, the ECN unit of Tradescape Corporation, which previously had negligible volume, traded nearly 800 million shares in March, placing it 17th in the Nasdaq rankings. It also surpassed Knight Trading Group to become the largest supplier of liquidity to SuperSoes, according to Nasdaq.

Ostensibly, MarketXT's reversal is because it is now publishing quotes over SuperSoes. MarketXT was the first ECN to join SuperSoes. It was followed last month by Track ECN, a unit of Track Data. Most ECNs, however, remain a part of SelectNet because of the risk of dual liability. That happens if both a subscriber and a non-subscriber simultaneously access the same quote. One would have to be compensated by the ECN.

MarketXT trades on SuperSoes under the moniker LightSpeed, or LSPD. That is also the name of its new platform and will soon become its new corporate name as well.

LightSpeed's order flow, according to a spokesperson, comes largely from Nasdaq dealers. Traders contacted for this article, however, said they were not adding liquidity to the system, nor were they aware of any dealers who were.

Bernard L. Madoff Investment Securities, one of two designated market makers to MarketXT, does not even use it. "We are subscribers, but I'm not actually putting in any liquidity," said Andy Madoff, head of the firm's Nasdaq desk. Some dealers believe the orders come from Tradescape's day trader customers. Those orders previously went to other ECNs. At least one dealer suspects MarketXT is making its own markets in an effort to attract business.