Archipelago and RediBook are to merge, creating a trading venue that will vie for the top spot among ECNS and pave the way towards the launch of the recently approved Archipelago Exchange (ArcaEx).
The merged entity will be called Archipelago, with Gerald Putnam serving as chief executive officer. The two companies expect to enter into a definitive agreement after the approval of their respective boards and expect to close on the transaction after obtaining required regulatory approvals. Financial terms of the deal were not disclosed.
"This transaction will effectively combine two strong pools of liquidity into one fully integrated and innovative trading platform," says Jerry Putnam, CEO of Archipelago.
The combined entity will outstrip publicly-traded Instinet to become the largest ECN by share volume, and pose a new challenge to the Nasdaq Stock Market and New York Stock Exchange. In October 2001 Archipelago and RediBook handled a combined average volume of approximately 460 million Nasdaq and listed shares executed per day.
Both ECNs have major investors from both the institutional and retail financial services sectors including American Century Investments, Bank of America, BNP Cooper Neff, Charles Schwab, GE/CNBC, Credit Suisse First Boston, E*Trade, Fleet Securities, Fidelity Investments, Goldman Sachs, Instinet, JP Morgan, Lehman Brothers, Merrill Lynch, NDB Capital Markets, Pershing, Spear, Leeds & Kellogg, and TD Waterhouse.
Recently approved by the Securities and Exchange Commission, ArcaEx, a regulated facility of the Pacific Exchange, will enable all buyers and sellers, including broker-dealers, sponsored institutions and market makers to meet electronically. Corporate issuers will be able to list their shares on the open book venue.