Archipelago to Merge with Rival Trading ECN

Archipelago LLC has agreed to merge with rival RediBook LLC, combining the second-and fourth-largest electronic stock trading systems and posing a bigger potential threat to the Nasdaq Stock Market and the New York Stock Exchange.

Archipelago Chief Executive Gerald Putnam, reached Wednesday at his home outside Chicago, said a conference call is scheduled for today. He declined to comment further.

“This is really going to put us on the map,” Putnam was quoted as saying by Dow Jones Newswires.

A merger would create a larger electronic competitor for Nasdaq and the NYSE, which still handle the bulk of stock trading.

Electronic communications networks, or ECNs, match investor buy and sell orders and serve as portals to trade with other ECNs and with securities firms. ECNs began to boom in the late 1990s as big investors searched for ways to trade shares at better prices, and lower cost, than on Nasdaq.

Since then, ECNs have set their sights on NYSE trading, though they still handle only a small slice of activity in NYSE-listed shares.

Archipelago expects to boost its business in NYSE stocks through the new automated stock exchange it’s forming with the Pacific Exchange in San Francisco. The Securities and Exchange Commission approved those plans last month.