Direct-Trade System Debuts Without a Hitch
After four years of development and several launch delays, a new stock trading system that allows institutions to trade directly and anonymously with one another was rolled out Friday at the Pacific Exchange with no major glitches, its developers said.
OptiMark, the electronic trading system developed by OptiMark Technologies and the Pacific Exchange, traded an unknown number of shares of one stock, 3M Co., the industrial and consumer products giant. In composite trading across all markets Friday, the stock rose $2 to close at $77.63 on above-average volume of 1.56 million shares.
A total of 114 firms, including some of the nation’s largest mutual funds and insurance firms, were eligible to trade on the new system, with about 80 firms on the “buy” side and 34 on the “sell” side.
“We’ve developed a new language for traders,” said William Lupien, chairman and founder of Durango, Colo.-based OptiMark.
The system is potentially attractive to large investors because the promised anonymity will allow them to buy or sell large blocks of stock without news of a transaction leaking into the market and causing prices to move before the trade closes. Thus, the system will compete with the New York Stock Exchange, where human “specialists” match buy and sell orders.
OptiMark began trading at 6:40 a.m. PST. By Thursday, it should be handling trades in four more stocks--Black & Decker, Campbell Soup, AlliedSignal and Eastman Kodak. About 100 stocks are expected to be trading by Feb. 8.
“We are, quite frankly, thrilled with where we are today,” said Phillip J. Riese, OptiMark’s chief executive.
In the first 30 minutes of trading, 12,800 shares of 3M changed hands over OptiMark, Riese said. There were no full-day numbers available, a spokesman for OptiMark said. Eventually, the system is expected to allow traders to buy and sell shares of the 2,600 NYSE and American Stock Exchange stocks that can trade on the Pacific, which is based in San Francisco but also has a trading floor in Los Angeles.
