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 [转贴][The Economist] Face value: Nasdaq's nemesis |
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明子鉅
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作者：明子鉅 在 海归商务 发贴, 来自【海归网】 http://www.haiguinet.com
Face value
Nasdaq's nemesis
Mar 15th 2007
From The Economist print edition
WHEN NASDAQ's advances were spurned by the London Stock Exchange earlier this year, a lack of subtlety was said to have contributed to its failure. Yet a decidedly unsubtle approach has done wonders for Dave Cummings. Mr Cummings runs BATS Trading, an electronic network that in less than two years has become America's third-largest stockmarket behind NASDAQ and the New York Stock Exchange (NYSE). BATS has captured around one-tenth of all trades in NASDAQ-listed securities and, as a result, has won the attention of big brokers. Last week Merrill Lynch joined Lehman Brothers, Credit Suisse, Morgan Stanley and others as an investor. BATS—which stands for Better Alternative Trading System—has “an excellent chance of achieving critical mass,” says Michael Bleich of Lehman, because it is fast, cheap and efficient.
A self-styled computer geek who cuts an unimposing figure, even when wielding a baseball bat emblazoned with the BATS logo, Mr Cummings nevertheless considers himself to be locked in an almighty struggle. His chosen enemy is NASDAQ's boss, Robert Greifeld. Mr Cummings calls him “Bob the Bully” and accuses him of turning his exchange into a “monster” that has sought to squash competition so it can raise prices. He is, he says, happy to be thought of as the “Anti-NASDAQ”. The rival exchange is the perennial target of the caustic e-mails that Mr Cummings fires off each week to a group of 1,500 devoted subscribers, including managers of rival exchanges.
The latest missive mockingly compares NASDAQ's two price cuts since January to a “blue-light special” at Kmart, a department-store chain that has seen better days. Mr Cummings likes to think they were a panicky response to BATS's latest market-share grab, an offer to abandon the usual fees and pay brokers to send business its way throughout January. NASDAQ derided the move, which cost BATS $6m, as irrational. But it worked: a lot of those who switched to the network have stayed with it. Volume averaged over 300m shares a day for the first time in February.
BATS's supporters say it is about more than gimmicky offers. It marries financial and technological expertise. Mr Cummings, who is 38, has a computer background but cut his teeth trading wheat futures, after being told he would make a lousy stockbroker. After leaving the pit he set up a firm, Tradebot Systems, to develop software that replicated what floor traders did, only better and faster. Mr Cummings thus became a leading proponent of algorithmic, or “black box” trading, in which computers decide when to buy and sell securities, eking profit out of momentary pricing anomalies. This type of trading is increasingly important for banks and hedge funds.
Two other things give BATS an edge on price. One is what Mr Cummings calls the “Halfway to India” strategy. Being based in Kansas City means his firm can pay its eggheads much less than if they lived in New York. BATS was able to grow rapidly last year while investing a mere $8m. Cheap its systems may be, but they are also stable, experiencing no problems during the recent market turmoil. The other advantage is its structure. Mr Cummings sees BATS as a “semi-profitable utility”—what NASDAQ and the NYSE were before they “got greedy” and went public. Its customer-owners see it as not only a low-cost alternative, but also a way to keep the big exchanges from the temptation of price hikes. The NYSE has
not cut its prices, but with BATS now trading NYSE-listed securities too, it will come under pressure to do so.
Fans of BATS say it is merely playing the big exchanges at their own game. When Mr Greifeld took over at NASDAQ, after all, he vowed to hit rivals hard on price. Yet although tussling with a similar-sized rival is one thing, being outsmarted by an upstart run on a shoestring is quite another. Some NASDAQ executives are loth even to mention BATS by name; when they do, they refer to it as a mere “matching engine”. It is true that NASDAQ does much more than its rival, such as listing shares, licensing indices and charging for data services (some of which, Mr Cummings gripes, were free before NASDAQ bought the firms that developed them). But BATS also wants to be a full-fledged stock exchange and is putting in an application with regulators.
The dangers of success
Though Mr Cummings has done remarkably well in a short time, he has yet to prove that his low-price model is sustainable. He has nimble rivals of his own to worry about, such as Direct Edge and the latest entrant, CBSX, based in Chicago. He also faces potential conflicts of interest: Tradebot could, in theory, take advantage of BATS's proprietary information, though it is managed by a separate team. But perhaps the biggest threat stems from BATS's success. Sceptics think it will suffer the same fate as other electronic networks that have proved their worth—such as Archipelago and INET—and will fall prey to one of the big two. Or perhaps London will swoop—an intriguing possibility since it would leave NASDAQ, which owns a stake in the London Stock Exchange following its aborted bid, with an interest in BATS.
Others think BATS could become a buyer itself. Mr Cummings says a merger with a regional exchange is an option. He is already talking with Liquidnet, the number-one network for big “block” trades, about a tie-up. His aim, he says, is to overtake NASDAQ within two years, helped by new rules that will force trades to be routed to the venue offering the best price. That seems optimistic, as NASDAQ is hardly standing still: it has captured over 20% of all trading in the NYSE's ten biggest stocks. Another ambition is to expand into Europe. He recently used his weekly e-mail to offer a baseball bat and the possibility of a job to the reader with the best ideas on how to do this, and received over 50 replies. Mr Greifeld might be only too happy to see his tormentor's attention shift across the Atlantic. Perhaps he should offer some
thoughts of his own.
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Dave Cummings wants to shake up America's stockmarket duopoly |
作者：明子鉅 在 海归商务 发贴, 来自【海归网】 http://www.haiguinet.com
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 [转贴][The Economist] Face value: Nasdaq's nemesis -- 明子鉅 - (6186 Byte) 2007-3-22 周四, 16:40 (918 reads)
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