OptiMark Enters Deal With Knight/Trimark

OptiMark Technologies, known for its new “black box” system that matches stock trades anonymously, said Tuesday it struck a deal with Nasdaq’s biggest market maker, Knight/Trimark Group Inc.

Analysts said the deal is likely to help both firms but that it ultimately carries more weight for OptiMark, which is striving to attract stock-trading volume and, in turn, more clients to its system.

The three-year agreement stipulates that Knight/Trimark will channel as much as 20% of its trades through OptiMark.

Knight/Trimark carries out about 350,000 trades daily. As a market-maker the firm is committed to buying and selling certain stocks and makes money on the spreads between trades.

OptiMark, by contrast, takes the middleman out of the trade, matching buyers and sellers directly. The idea: Bring two investors together at a price both will like.

But to survive, OptiMark must attract liquidity, or order flow, to match stock orders at good prices. Despite use on the Pacific Exchange and, recently, on Nasdaq, “The word is that they are really struggling right now,” said one analyst who asked not to be named. Some traders say the system is too cumbersome to use.

An OptiMark spokesman declined to respond directly to questions about whether the company was struggling to generate trading volume. “We are seeking liquidity, and that is the reason behind this transaction,” he said.

Knight/Trimark, which deals in more than 7,300 stocks listed on Nasdaq, said it will bundle small investors’ orders into larger blocks to route them through OptiMark.

In exchange for order flow, Knight/Trimark will earn warrants in OptiMark stock based on volume and could potentially become the firm’s largest stakeholder.

Knight/Trimark shares eased 63 cents to $27.88 on Nasdaq. The stock is off 61% from its May peak.