In a stock deal valued at $100 million, online trading firm Tradescape.com last week acquired the after-hours trading system MarketXT. Under the arrangement, which is expected to be completed within a few weeks, Tradescape is expected to integrate the MarketXT trading system with its own and route orders through the recently SEC-approved ECN. While exact terms of the deal have not been revealed, the companies have outlined their plans to go after the institutional arena.
MarketXT and Tradescape are looking to expand and appeal not only to professional traders and individual online investors, but to institutional clients as well. Craig Vorselen, executive vice president of technology and operations at MarketXT, points out that institutions are already trading through Instinet and therefore could be receptive to other ECN avenues such as MarketXT given the liquidity that he hopes the Tradescape arrangement will provide in the future.
Were going to be looking at creative ways to leverage each others capabilities to the benefit of all our customers, says Vorselen. Specifically, he adds that MarketXT will be a destination for execution for Tradescape subscribers, although it is not the only ECN that Tradescape will be dealing with.
MarketXT, which currently operates from 4 p.m. until 8 p.m., is also looking to extend its hours into the regular trading day sometime this spring after completing the necessary technology upgrades to the system. There are small things that need attention, explains Vorselen. For example, trade reporting and processing when the consolidated tape is open and when its closed and being able to build in that type of functionality such that you can flip back and forth. Then theres the matter of dealing with the order-entry firms and doing the work necessary to establish the linkages with them.
This deal comes a week after Charles Schwab acquired CyBerCorp, an online brokerage and electronic trading technology supplier. Its apparent that firms servicing the active traders have developed some very interesting technology that takes online investing to the next level, and you see the established players are very interested in this, notes Vorselen. MarketXT, which began operating as an ECN on January 28th and currently trades around 100,000 shares a session, will become a wholly owned subsidiary of Tradescape once the arrangement is complete.