By Joseph Giannone and Jonathan Keehner
NEW YORK (Reuters) - BIDS Trading LP, an electronic stock-trading system founded last year by Wall Street brokers, intends to have 12 firms connected and trading blocks of shares by the end of this month, Chief Executive Tim Mahoney said on Monday.
"We're technically live now. I've got two firms hooked up to me, and trades going through," Mahoney said at the Reuters Exchanges and Trading Summit in New York. "We are connecting through the other investors, and by the end of this month I'll hopefully have all 12."
Wall Street stock trading is undergoing a revolution driven by new technology, which gives investor many new options. At the same time the evolution of NYSE Euronext (NYX.N: Quote, Profile, Research, Stock Buzz) and the Nasdaq Stock Market Inc. (NDAQ.O: Quote, Profile, Research, Stock Buzz) into for-profit companies has prompted brokers, wary of higher transaction fees, to invest in regional exchanges and new networks as alternatives.
In March, original BIDS investors Citigroup (C.N: Quote, Profile, Research, Stock Buzz), Goldman Sachs Group Inc. (GS.N: Quote, Profile, Research, Stock Buzz), Lehman Brothers Holdings Inc. (LEH.N: Quote, Profile, Research, Stock Buzz), Merrill Lynch and Co. Inc (MER.N: Quote, Profile, Research, Stock Buzz), Morgan Stanley (MS.N: Quote, Profile, Research, Stock Buzz) and UBS AG (UBSN.VX: Quote, Profile, Research, Stock Buzz) were joined by Bank of America Corp. (BAC.N: Quote, Profile, Research, Stock Buzz), Bear Stearns Cos. BSC.N, Credit Suisse Group (CSGN.VX: Quote, Profile, Research, Stock Buzz), Deutsche Bank AG (DBKGn.DE: Quote, Profile, Research, Stock Buzz), JPMorgan Chase & Co. (JPM.N: Quote, Profile, Research, Stock Buzz) and Knight Capital Group. (NITE.O: Quote, Profile, Research, Stock Buzz)
"Part of my coming on (to BIDS) was having conversations with the original six investors, saying that we should consider opening up to a broader investor base," Mahoney said, adding the new investors bring "both intellectual capital and obviously (order) flow."
BIDS is designed to let investors trade blocks of shares anonymously and quickly without having to go through a traditional broker. The alternative trading system will compete against other block trading venues offered by Liquidnet, Investment Technology Group Inc.'s (ITG.N: Quote, Profile, Research, Stock Buzz) POSIT and Pipeline.
Mahoney is actively recruiting more customers for BIDS, including some who use Liquidnet and POSIT. "You have another 50 large buyside accounts that you want to go after," he said.
An earlier wave of electronic communication networks, such as Archipelago and INET, was in recent years pared down by a series of takeovers. In similar development, BIDS is one of a number of anonymous block-trading systems that Mahoney said may also be whittled down over time through mergers. Continued...
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