By Gavin Adamson
London, U.K.
(March 20 – 16:45 ET) – American-based electronic communications networks, or ECN’s, aren’t in any hurry to do business in Canada. Although there have been rumours that these alternative trading systems were making their way North soon, executives for the Island ECN Inc., and Archipelago LLC deny they have their sights set on Canada — at least in the near future. These statements were made during an interview at the third annual Buy-Side-Sell Side securities regulation conference in London.
Island has had various Canadian brokerages ask if its services might be available to trade in Nasdaq securities, says Christopher Concannon, deputy general counsel but that’s different than setting up shop in Canada to trade domestic stocks. “Setting up Island Canada, or Island UK, for that matter, is very difficult, unless we could do it through a
partnership, says Concannon. “We could ship up technology up northward and partner that way.”
The problem, he says is resources. ECNs are high volume, low margin operations. They’ve been establishing their business models in the U.S. for just a few years and don’t have the capital to risk in a new market yet.
“I had a conversation last week with someone suggesting we have Archipelago on the Isle of Man, where they trade these products no one’s ever heard of,” quips Mike Cormack, national sales manager for the ECN.
ECNs are profitable in the U.S. mostly because of inefficiencies in the Nasdaq trading engine’s order book, whose issues they trade. The Securities and Exchanges Commission in the U.S. has told the New York Stock Exchange that it must loosen its hold prohibiting non-member firms from trading stocks listed there and ECNs can hardly wait.