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July 15, 2007

On Track for July

By Nina Mehta

Track ECN is celebrating July with a low liquidity taker rate. The ECN will drop its take fee to 20 cents for 100 shares from 23 cents. Its rebate for liquidity providers will remain 22 cents for 100 shares.

This inverted pricing-in which the take fee is lower than the rebate-means the ECN will lose 2 cents for every 100 shares executed in July, instead of making 1 cent based on its customary pricing spread. After July, the take charge will revert to the previous fee.

"We're trying to get liquidity providers filled faster, therefore creating a better opportunity for liquidity providers to be profitable on their trades," says Joe Schultz, a vice president at Track ECN. "To do that, we must cater to the take side, because pricing on the take side dictates where you are on the liquidity taker's router. We want takers to come to us before other destinations."

Schultz expects more firms to connect directly to Track to take advantage of the lower take rate. Track currently has about 100 direct connections.

Track's pricing sale mimics BATS's January inverted pricing schedule, which boosted its volumes and encouraged brokers to connect directly to the ECN. BATS provided rebates of 30 cents for 100 shares and charged 20 cents.

Track's take fee discount applies to internal executions, which represent 30 percent of Track's business. The majority of the ECN's business comes from executions via the National Stock Exchange, where Track posts its order book. Track liquidity providers who get executed through the NSX will still get 27 cents per 100 shares.