Archipelago's Move Towards Exchange Status: An Analysis of Archipelago Trading in NYSE and NASDAQ Stocks

28 Pages Posted: 13 May 2005

See all articles by Vanthuan Nguyen

Vanthuan Nguyen

Morgan State University

Bonnie F. Van Ness

University of Mississippi - Department of Finance

Robert A. Van Ness

University of Mississippi - Department of Finance

Date Written: May 2005

Abstract

Archipelago began reporting trades and quotes to the Pacific Stock Exchange in 2002 for NYSE-listed securities and in 2003 for NASDAQ-listed securities. These events mark the time that Archipelago began migrating stocks from its ECN platform to the exchange platform, thereby becoming a stand-alone exchange. We examine the impact of becoming a stand-alone exchange on execution quality and market share of Archipelago to gain insight into its ability to compete for order flow in NYSE and NASDAQ stocks. We find that the change has a positive effect on Archipelago's execution quality for NYSE stocks, while it has a negative effect for NASDAQ stocks. A possible explanation is that Archipelago lost the large pool of liquidity that SuperMontage provided when it became a stand-alone exchange, and that loss may offset any gain associated with having exchange status. Overall, exchange status helped Archipelago slowly make headway in the NYSE-listed securities arena.

Keywords: Electronic Communication Networks, NASDAQ, NYSE, Archipelago, Limit Order Book Fragmentation

JEL Classification: G14, G18

Suggested Citation

Nguyen, Vanthuan and Van Ness, Bonnie F. and Van Ness, Robert A., Archipelago's Move Towards Exchange Status: An Analysis of Archipelago Trading in NYSE and NASDAQ Stocks (May 2005). Available at SSRN: https://ssrn.com/abstract=720322 or http://dx.doi.org/10.2139/ssrn.720322

Vanthuan Nguyen (Contact Author)

Morgan State University ( email )

School of Business and Management
1700 East Cold Spring Lane
Baltimore, MD 21251
United States

Bonnie F. Van Ness

University of Mississippi - Department of Finance ( email )

Oxford, MS 38677
United States
662-915-6749 (Phone)
662-915-7968 (Fax)

Robert A. Van Ness

University of Mississippi - Department of Finance ( email )

Oxford, MS 38677
United States

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