(September 22 – 12:00 ET) – The Toronto Stock Exchange has abandoned its plans to develop an electronic call market with OptiMark Inc.
Yesterday the Wall Street Journal reported that OptiMark is suspending its trading operations on the Nasdaq and the Pacific Exchange. New Jersey-based OptiMark runs those trading systems from the suburbs north of Toronto and was to be developing an electronic call market for the TSE.
Brenda Edwards, media services at the TSE, says it is no longer pursuing a call-market with Optimark because, “A prerequisite of the TSE furthering its letter of intent with Optimark was the successful execution of their product at the PCX and Nasdaq.”
With those operations suspeneded, so are plans with the TSE. “The TSE is currently exploring other opportunities,” Edwards says.
In shuttering the trading operations 110 jobs will be lost at OptiMark, almost half its workforce, and OptiMark’s CEO, Phillip Riese, is stepping down to be replaced by David Johnson.
OptiMark’s anonymous matching system was once tipped as a threat to old school stock exchanges. However the WSJ reports that traders found the system tedious and rarely useful. OptiMark will now focus on developing exchange software applications for a variety of markets.
“We have been unsuccessful in building liquidity in our two facilities and we spent a heck of a lot of money doing that,” Johnson told the WSJ, which reports that the firm has not been able to find a buyer for the cash-hungry businesses. “We have chosen, instead of selling the equity business, to work on a couple of deals I can’t tell you about,” Johnson said.
One OptiMark executive said, “it is tough to build liquidity from scratch, and as a facility of an exchange, we have none of the tools of a broker-dealer to do that independently. Second, a system needs to be both much more part of the way people that use it do their work, and this system made too much of an effort to change the way people work.”
-IE Staff