Eight rival electronic trading systems today said they will link up to make trading information and orders more accessible to investors outside traditional market hours.
The eight electronic trading systems are Archipelago, Bloomberg Tradebook, the Brass Utility, Instinet, the Island ECN, MarketXT, REDIBook, and Strike Technologies.
The companies hope to create a transparent network that will allow investors to participate in the electronic trading systems for Nasdaq stocks and exchange listed securities.
In recent months, electronic communications networks have been gaining momentum as powerful investors boost them with funds to better compete against traditional stock exchanges.
Just yesterday, General Electric's business news television network CNBC bought a 12.4 percent stake in Archipelago. Merrill Lynch earlier this month took a 14.3 percent stake in Archipelago.
These electronic trading networks are increasingly popular because they can carry out trades at rock-bottom prices compared to the traditional exchanges. Their advantage comes from not having the cost of running trading floors in expensive financial districts, but rather just being a group of servers in an office.
Electronic trading systems recently have garnered an increasing share of the Nasdaq market and are expected to gain a significant share of trading in exchange-listed securities.
Terms for the agreements will be negotiated individually between each of the participating electronic trading systems. The after-hours trading network created by connecting these participants will also be nonexclusive, and one or more of the participating electronic trading systems are free to link up with other trading systems as after-hours volume develops in those systems.
During traditional market hours, the best prices available on electronic trading systems for Nasdaq securities are consolidated with the quotes of market makers and specialists and disseminated through the National Market System.