Commentary

Ronald Jordan
Traders Magazine Online News

Understanding Your Data is No Longer Optional

In this contributed article from Global Markets Advisory Group, the advisory discusses the importance of data and how organizations should augment existing skill sets and capabilities to add a data-focused perspective to their operating fabric.

Traders Poll

Do you expect SEC Chairman Jay Clayton to push for regulation in the cryptocurrency issuance and trading markets?

Yes

74%

No

5%

The CFTC will push for regulation

21%

Free Site Registration

April 1, 2004

An Embarrassing Discovery About Speed and the ECNs

By John A. Byrne

ECNs are not equal execution providers. That's what a new study by a research firm suggests.

Instinet, for instance, offers some of the highest levels of price improvement. Island, which was acquired by Instinet, had the best overall propensity in all markets for price improvement. Attain had the fastest price improvement in the Nasdaq market. Brut offered the lowest implicit execution costs on Amex.

Want the highest levels of price improvement in certain volume among Nasdaq NNM market orders - and at the fastest speed? Nextrade has that. Tradebook, meanwhile, had the greatest certainty of execution among Nasdaq stocks.

These are some of the claims in the study by the research and advisory firm Celent Communications. The study also singles out the average execution speed of ECNs, which it contends, ranges from "impressive to embarrassing."

"Most ECNs execute most of their marketable orders within 10 seconds, and yet some execution speeds of certain marketable orders are as slow as three to five minutes," according to the study, authored by Jodi Burns. The average execution rates on ECNs for marketable orders is 39 percent compared with 83 percent across other market centers, notes the Celent study. The study suggests that ECNs are "great at executing liquid stocks at impressive speeds but they are not the best place to send orders in stocks with small to medium activity levels."