Vendors of order management systems stand to benefit from the ongoing battle between the New York Stock Exchange and the Nasdaq Stock Market for equity trading supremacy, according to industry observers.
That's because regardless of which market ends up on top, the systems — software that allows traders to send their orders and handle reporting and settlement — will serve as the intermediary between the market and the traders.
"Order management systems are the beneficiaries of (market structure changes) because they own the desktop real estate at the buy side," said Henry Yegerman, director of research product management at ITG Inc., New York. "They can be the intermediary between the buy side and the sell side in delivering analytics and execution."
Those market structure changes, which all reflect the increasing importance and use of electronic trading, include:
• the Securities and Exchange Commission's Regulation NMS, which, among other things, requires that orders be sent to the market center with the best price for automatically executable orders;
• the merger agreement between the NYSE and all-electronic Archipelago Holdings Inc., Chicago; and
• the New York-based Nasdaq Stock Market Inc.'s planned acquisition of INET, the electronic trading platform owned by Instinet Group Inc., New York.