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August 31, 2002

ECNs Face a Loss of Market Share

By Gregory Bresiger

Nasdaq's new trading platform, SuperMontage, is going to take market share away from electronic communications networks. That prediction comes from the TowerGroup, a Needham, Mass., research group that has just issued a report.

"SuperMontage will prosper at the expense of competing ECNs, particularly those that cannot present a compelling value proposition to users," according to the report. "The system's added trading functionality (such as depth of market, hidden reserves and pretrade anonymity) will go a long way toward stemming Nasdaq's loss of market share." The ECN share of Nasdaq executions, according to the report, will decline from 48 percent to 30 percent over the next 15 months. The Tower Group also predicts that SuperMontage will handle about half of all Nasdaq executions in the next two years.

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