US options exchange operator The International Securities Exchange (ISE) is launching an electronic equities trading platform in partnership with a group of high-profile broker dealers and exchange members.
The ISE Stock Exchange will be controlled by the ISE, with minority stakes held by a number of broker-dealers including Bear Stearns, Citadel Derivatives, Deutsche Bank, Interactive Brokers, JPMorgan, Knight Capital and Sun Trading.
David Krell, president and chief executive officer, ISE, says: "We have built a fully electronic exchange from the ground up that will promote competition, foster innovation, improve the overall market and transform the way that equities are traded."
Krell told reporters that the broker dealers and exchange members involved in the project have contributed $32 million in capital and will provide order flow and liquidity. He says the initial funding will cover the expenses and capital outlays necessary to support the business."
The new stock exchange will launch with its first product, called MidPoint Match (MPM), early in Q3. This is a continuous, instantaneous, fully automated, and anonymous matching platform which will automatically sell equities at the midpoint price of the national best bid and offer throughout the day.
ISE says the patent-pending MPM trading platform will match and execute all round lot orders, large and small, and is especially suited for orders generated by algorithms.
Commenting on the MidPoint Match platform, Thomas Ascher, chief strategy officer at ISE, says the system has been built specifically to support the electronic trading strategies that define today's market, but until now, haven't been open to all market participants in a single arena.
"By leveraging our current infrastructure, network connectivity, and technological expertise, as well as our high level of customer service, we believe that MidPoint Match offers a unique and compelling means to trade equities anonymously and at competitive rates," says Ascher.
Users can access MPM via their existing trading platforms and protocols, including FIX. ISE says the benefits to users include complete anonymity and the elimination of spread and market impact. Traders will maintain control over how their orders are managed, while taking advantage of the ability to access non-displayed liquidity.
ISE says the MPM platform will be followed by an integrated displayed market offering in the fourth quarter, subject to regulatory approval.