Outlook 2007 bodes a return of market fragmentation.(changes in the securities industry)

Traders, January, 2007 by Chapman, Peter

The year 2007 is looking a lot like the year 2000-only more so. Back then the trading landscape was splintered into 10 electronic communication networks, seven stock exchanges, one Nasdaq and one dark pool-nearly 20 venues in all on which to trade. That number shrank considerably but now all of a sudden there are five ECNs, 10 stock exchanges and about 30 dark pools. Fragmentation is back with a vengeance.

Liquidity seekers are right back where they were at the beginning of the century. In 2007, they must navigate more than 40 possible execution venues in their search for a good fill.

"The outlook for 2007 is one of confusion and apprehension," says Michael Rosen, the resident market structure expert at Los Angeles-based brokerage UNX. "We're moving...

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