The Pacific Exchange (PCX) has received approval from the Securities and Exchange Commission (SEC) to launch the Archipelago Exchange (ArcaEx), the first fully electronic national stock market for New York Stock Exchange, American Stock Exchange, and Nasdaq securities.
Archipelago, a US-based electronic communications network (ECN), will convert its advanced equity trading system into ArcaEx, a regulated facility of the Pacific Exchange, and a replacement for the PCX's current floor-based equities marketplace.
According to Jerry Putnam, CEO of Archipelago, ArcaEx will provide a much needed competitive alternative to traditional market centres.
"Our goal for ArcaEx is to create an unbiased exchange that provides all market participants with a consistent and fair place to trade, without the hidden information and special advantages available to only a select few today. The approved rules provide a market structure that addresses the needs of investors looking for an open place to trade, one that uses price-time priority and links pools of liquidity in an intelligent way," says Putnam.
ArcaEx will enable all buyers and sellers, including broker-dealers, sponsored institutions and market makers to transact electronically. Market makers will be able to participate and price improve orders automatically. Corporate issuers will have the opportunity to list their shares on a venue that provides consistent order handling and an open book allowing all investors to see the same information when making trading decisions.
The Pacific closed its equities trading floor in Los Angeles in May 2001, in preparation for the launch of ArcaEx. It will continue operating its San Francisco equities floor until ArcaEx begins trading, which is currently scheduled for early 2002. ArcaEx will not affect the Pacific's options floor.
Archipelago and the PCX had originally intended to form a new national market in March 2000.