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Archipelago set for full exchange
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July 27, 1999: 6:33 p.m. ET
ECN will seek SEC application to convert to full exchange, as Instinet takes a stake
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NEW YORK (CNNfn) - Electronic stock trading system Archipelago is set to ask for regulatory approval to become a fully-fledged stock exchange.
The company unveiled its intention to coincide with the announcement that the global news and information group Reuters had taken a 16.4 percent stake in the group for an undisclosed sum.
The stake will be held by the U.K.-based company's Instinet unit, which is the current leader in off-exchange trading systems.
Archipelago owns and operates a so-called electronic communications network or ECN, which allows members to trade Nasdaq stocks.
The Instinet investment gives the ECN a powerful group of backers as it plans for its conversion into a fully blown electronic stock exchange. Goldman Sachs, J.P. Morgan and E Trade, already own stakes of between 20 and 25 percent each.
The move to file for a conversion to a self-regulating stock exchange follows similar plans by the second largest ECN, Island ECN. Archipelago chief executive Gerald Putnam said the SEC filing was only "a few days away."
Only last week, Fidelity Investments, Charles Schwab & Co., Donaldson, Lufkin & Jenrette and Spear, Leeds & Kellogg announced plans to establish a new electronic communications network.
The Archipelago announcement emphasizes the accelerating pace of change that is now stirring the relatively becalmed world of stock exchanges.
"Advancing technology, regulatory shifts and new business models are creating dramatic changes in the way securities are traded around the world," Douglas M. Atkin, president and chief executive officer of Instinet said.
Only last Friday, the venerable New York Stock Exchange said it was considering an initial public offering in November.
The Nasdaq exchange has similarly hinted at such a move in the past. In Europe, the major exchanges are discussing plans that would ultimately lead to the creation of a giant, pan-European trading system. However, that goal still appears some way off.
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Reuters
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