An ENC automatically matches bids and offers from multiple broker-dealers. BATS Trading and Track ECN will use Savvis' financial extranet to access market data, route orders to market centers, and connect with other financial institutions.

Steven Marlin, Contributor

August 22, 2005

2 Min Read

Savvis Inc. said Monday that two electronic communication networks, BATS Trading Inc. and Track ECN, will use Savvis' financial extranet to access market data, route orders to market centers, and connect with other financial institutions.

An electronic communication network automatically matches bids and offers from multiple broker-dealers. The number of ECNs, however, has declined due to consolidation in the electronic trading industry. Earlier this year, the New York Stock Exchange revealed plans to merge with Archipleago Holdings Inc., and the Nasdaq Stock Market Inc. said it was buying Instinet Group.

The consolidation has caused market participants to seek out other venues to avoid the creation of "a duopoly in trading markets," says Joe Ratterman, chief operating officer at BATS Trading Inc.

Savvis provides hosting, networking, and application services for 4,700 financial-services firms. By collocating their communication systems, trading firms can reduce latency, or the time needed to execute trades, and connect to each other more easily, according to Savvis. Its financial extranet provides "a shared platform to which financial institutions can connect and get their service out to market quickly," says Matthew Fox, VP and general manager of Savvis' financial-services division.

BATS, which plans to launch its ECN in early 2006, will host its data center at Savvis' facility in Weehawken, N.J. "Savvis already provides connectivity to many of the market participants we'll be looking to attract," Ratterman says.

Track ECN, a subsidiary of Track Data Corp., will connect its data center to Savvis to reach other market participants on the Savvis network. It will charge trading firms that send orders to it electronically through Savvis a fee of $2.50 per thousand shares traded, versus a fee of $3.00 per 1,000 shares for orders that come to it indirectly through Nasdaq, says Rafi Reguer, Track Data's VP of marketing and corporate communications. Says Reguer, "In a lot of cases, we've approached financial institutions that have been hitting us indirectly, and therefore paying more, and gotten them to connect to use directly through Savvis."

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