The venture, known as the Boston Equities Exchange, "will provide greater choice and competition among markets, which is vital to keeping trading costs low and ensuring quality executions," said Mark Haggerty, executive VP at Fidelity Brokerage Company, in a statement.
Fidelity Brokerage and three other investment firms -- Citigroup, Credit Suisse First Boston, and Lehman Brothers -- have taken equity stakes in the Boston Equities Exchange, which will be phased in over a 12-to-15 month period. In a similar move last week, the Philadelphia Stock Exchange sold equity stakes to Citigroup, Credit Suisse First Boston, Morgan Stanley, and UBS.
The steps by the regional exchanges are intended to bolster their market shares vis-a-vis the two dominant American stock markets, the New York Stock Exchange and Nasdaq. The NYSE is merging with Archipelago Holdings Inc., whose ArcaEx E-trading platform in July processed 3.5% of trades in NYSE-listed securities and 25% of trades in Nasdaq-listed securities.
Nasdaq has agreed to acquire Instinet Group, whose Inet E-trading platform processed 25% of Nasdaq-listed securities in July. Earlier this month, Nasdaq said it intends to withdraw from the Intermarket Trading System, which links the New York Stock Exchange with regional exchanges and Nasdaq. Nasdaq said the SEC's adoption earlier this year of rules for a national market system, known as Reg NMS, cleared the way for its withdrawal from ITS, which was established in an era when most trades were executed manually by floor-based traders.