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News > Deals
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ECNs set merger
graphic November 29, 2001: 9:35 a.m. ET

Archipelago and Goldman's Redibook create largest electronic trading network.
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  • Archipelago
  • Redibook
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    NEW YORK (CNN/Money) - Two electronic communications networks (ECNs) -- Archipelago and Goldman Sachs' Redibook -- have agreed to merge, forming the largest electronic stock exchange.

    The ECNs described the proposed transaction Thursday as a "merger of equals," but neither firm disclosed financial terms of the deal.

    "This transaction will effectively combine two strong pools of liquidity into one fully integrated and innovative trading platform," Archipelago CEO Jerry Putnam said.

    The Securities and Exchange Commission approved Archipelago's application last month to become a stock exchange using the Pacific Coast Exchange, which Archipelago purchased in 2000, the Wall Street Journal reported.

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    The combined firm, which will also be called Archipelago, will include order flow from Redibook and may be up and running by February, according to the Journal.

    The new Archipelago will be the largest ECN with 15.9 percent of all Nasdaq trades. Instinet (INET: down $1.40 to $9.70, Research, Estimates) will be the second largest ECN in market share with 13.7 percent, followed by Island with 9.4 percent and Tradebook with 3.9 percent, according to a report from J.P. Morgan Chase.

    With the disparity between market share growing, many analysts believe the proposed merger is the first round in a wave of consolidation for ECNs.

    "This could be the start of the dominoes falling," Bear Stearns & Co. securities analyst Amy Butte told the Journal. "This puts pressure on the other ECNs to start thinking about their own consolidation."

    ECNs are gaining favor with investors because they have no vested interest in the companies they trade and use set commissions. graphic

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    Archipelago

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    Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.

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