20 години печелим заедно
A collusion scandal among market-makers in the 1990s prompted the Securities and Exchange Commission to issue the Order Handling Rules in 1996 to protect customers’ limit orders and increase transparency in the NASDAQ market.
Electronic communications networks or ECNs quickly became a popular place to display limit orders, posing a strong competition to NASDAQ. That trend gathered momentum in 2001 when decimalization, introduced during the longest stock market downturn since World War II, crushed margins and profits in the market-making business.
Created by former trader Jerry Putnam and built on software maker Townsend Analytics’ technology, Archipelago was among the first four ECNs, along with Instinet, which founded the agency brokerage business in 1969, Island and Bloomberg Tradebook.
Unlike well-established Instinet or Island and Tradebook, which enjoyed the support of strong parents, Archipelago had to look hard for liquidity at first. Putnam conceived the “outbound” ECN model: if your order can’t be immediately matched in Archipelago’s book, Archipelago will seek a match elsewhere.
As quasi-exchanges, ECNs espoused the concept of close pools of liquidity. Putnam’s outbound ECN model changed that notion, hence the name of Archipelago, a clever alternative to Island.
In 1998, the SEC issued its Regulation ATS, which, among other topics, discussed the conditions under which an alternative trading system could register as exchange instead of broker-dealer. Eager to collect market data revenue, several ECNs, including Archipelago, filed the initial paperwork but held little hope the SEC would act on it.
Putnam thought of an alternative route: in July 2000, Archipelago partnered with the Pacific Exchange (PCX), which became the self-regulatory organization for the electronic stock market, named ArcaEx. The exchange today operates on a Sun Microsystems Solaris platform that handles trading in equities listed on the New York Stock Exchange and Nasdaq as well as exchange-traded funds (ETFs) listed on the American Stock Exchange.
In January 2005, Archipelago Holdings announced its planned acquisition of PCX Holdings, which would pave the way for ArcaEx to become the first U.S. exchange to trade both equities and options electronically.
Archipelago grew both organically and though acquisitions, completing its merger with Redibook in 2002. The acquisition of Globenet that year also allowed ArcaEx to enter the OTC Bulletin Board arena, which are traded on its ArcaEdge system.