The merged entity will be called Archipelago, with Gerald D. Putnam serving as Chief Executive Officer. Archipelago and REDIBook expect to enter into a definitive agreement after the approval of their respective boards and expect to close on the transaction after obtaining required regulatory approvals. Financial terms of the deal were not disclosed.
"This transaction will effectively combine two strong pools of liquidity into one fully integrated and innovative trading platform," commented Jerry Putnam, CEO of Archipelago. "As importantly, we add partners with the same core focus on openness, best execution for investors, speed, efficiency, and low cost. This strengthens our ability to compete effectively against traditional exchanges as we move toward the launch of ArcaEx."
REDIBook CEO, Lawrence Leibowitz, commented, "We are thrilled to find a partner who shares a similar view on the needs and evolution of the financial markets. These two ECNs have consistently led the pack in volume growth and innovation. We expect that the new Archipelago will go even further towards providing the liquidity and quality executions our customers require. "
Based on current volumes, the combined entity will become the largest ECN. In October 2001 Archipelago and REDIBook handled a combined average volume of approximately 460 million Nasdaq and listed shares executed per day. In the last two quarters both Archipelago and REDIBook have, as measured by percentage volume increase, been the fastest growing ECNs.
Current clients of both Archipelago and REDIBook will experience a seamless transition to a combined execution destination. Both ECNs have major investors from both the institutional and retail financial services sectors including American Century Investments, Bank of America, BNP Cooper Neff, Charles Schwab & Co. Inc., GE/CNBC, Credit Suisse First Boston, E*Trade, Fleet Securities Inc., Fidelity Investments, Goldman Sachs, Instinet, JP Morgan, Lehman Brothers, Merrill Lynch, NDB Capital Markets, Pershing, Spear, Leeds & Kellogg, and TD Waterhouse.
Recently approved by the Securities and Exchange Commission, the Archipelago Exchange (ArcaEx), a regulated facility of the Pacific Exchange, will enable all buyers and sellers, including broker-dealers, sponsored institutions and market makers to meet electronically, combining the best of current technology with a forward-thinking market structure. Additionally, corporate issuers will have the opportunity to list their shares on a venue that provides an open book, allowing all investors to see the same information when making trading decisions and benefit from consistent order handling, since no intermediary touches an order on this technologically advanced exchange.
About Archipelago
The Archipelago ECN was formed in December 1996 with software developer Townsend Analytics. It is one of the four original ECNs approved in January 1997 by the SEC. Archipelago uses a proprietary algorithm to find the best price for orders and provides an open limit order book for Nasdaq and listed stocks. Its leading-edge technology, open architecture, and innovations facilitate best execution for investors. The Archipelago trading system provides investors fast, cost-efficient and anonymous access to the market. Archipelago's average daily share volume for October 2001 has more than doubled since October 2000 and internal liquidity more than doubled in 2001.
About REDIBook
REDIBook ECN is continuing to grow at a rapid pace and was the second largest ECN in the third quarter of 2001. Owned by several large broker dealers, REDIBook is designed to provide maximum execution capabilities for its subscribers. With over 14,000 users and 425 API links in production, REDIBook is a premier source of liquidity for institutions, hedge funds, broker dealers, market makers, and active traders. REDIBook's hours of operation are 7:30 a.m. - 8:00 p.m. ET, giving subscribers the ability to trade Nasdaq stocks during regular market hours and both Nasdaq and U.S. listed stocks in the pre- and post-market sessions. For more information, please visit the REDIBook website at http://www.redibook.com
