US Equities Market: Moving Towards a Central Limit Order Book?

May 25, 2000

Abstract

Cambridge, MA, USA, May  30, 2000

? Report published by  Celent Communications  

The future of equities trading in the US is in the air.  The increased fragmentation of the US equity market, many market watchers claim, is the direct result of the emergence and adoption of electronic matching systems.  In the last few months, that market structure has come under intense scrutiny as various industry groups led by the SEC and large Wall Street firms argue over the virtues creating a central limit order book.  Only the creation of a “virtual” central limit order book, where multiple major market centers are linked to form a tightly integrated super national market system, they assert, will save the current US equities market structure from further fragmentation.  

Members of Celent Communication’s Institutional Securities & Investments research service can be download this report electronically by clicking on the icon to the right. 

In a new Wholesale e-Trading report, “ ?” Celent Communications reviews the current structure of the US equities market and examines the major market participants in the central limit order book debate.

“Market fragmentation will get even worse before we reach a breaking point,” notes Sang Lee, an analyst for Celent.  “Both sides of the central limit order book debate want to convince the investing public that it is in their best interest to either support or oppose the creation of a central limit order book. Unfortunately, below the surface, this debate is all about making a profit in the highly competitive and rapidly changing US equities market and has nothing to do with any altruistic motives.  In the long-run, however, the momentum towards the creation of a central limit order book will simply be too strong to resist.”  

A Table of Contents is available online.

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned operating unit of Marsh & McLennan Companies [NYSE: MMC].

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Michele Pace
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Chris Williams
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Table of Contents

 

Cambridge, MA, USA, May  30, 2000

?

Return to Abstract of this report.

EXECUTIVE SUMMARY 3
INTRODUCTION 4
MARKET STRUCTURES 6
  NASDAQ 6
  New York Stock Exchange (NYSE) 11
NATIONAL MARKET SYSTEM 15
  Intermarket Trading System (ITS) 15
  Proponents of CLOB 17
  Opponents of CLOB 18
  Central Limit Order Book 19
LOOKING AHEAD 21

 

        

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