The market shares of Nasdaq Stock Market and the New York Stock Exchange (NYSE), the US’s two largest equity trading platforms, have continued to fall over the past year, while alternative platform Direct Edge’s market share has risen sharply.
Direct Edge’s matched market share of all US equities was 11.80% in July 2009, a 141% increase over the 4.88% share it reported in the same month last year. BATS, the US’s newest equities exchange following its conversion from ECN status last November, has also enjoyed market share growth over the same period, although it was more subdued. Its July 2009 market share of 10.83% was 7.2% higher than July 2008’s 10.1%. Direct Edge plans to make the transition from ECN to exchange in Q4 this year.
Of the two incumbents, Nasdaq fared worst. Its market share of all US equities fell 27% to 22.1% in July 2009 from 30.3% in the same month last year. NYSE’s market share dropped 17% over the past year to 28.4% this July from 34.3% last.
However, while Direct Edge’s US matched market share has grown the most over the past year, it has fallen in recent months from the 12.55% high it achieved in May 2009. June’s market share was 11.89%.
BATS’ market share, meanwhile, has been climbing steadily since April. The exchange grabbed 10.24% of US trading in May and 10.72% in June. Nasdaq’s July market share of 22.1% is an increase from the 19.8% it achieved in both June and May. However, NYSE’s July market share is down from the 29.7% it held in June and the 30.2% it had in May.
Direct Edge, originally a subsidiary of broking firm Knight Capital Group, was launched in November 2005 after Knight acquired Attain ECN from Domestic Securities. It is now owned by a consortium that includes Knight, fellow brokers J.P. Morgan and Goldman Sachs, US options bourse International Securities Exchange and proprietary trading firm Citadel Derivatives Group.
BATS was incorporated in June 2005 and began trading in January 2006. Shareholders include proprietary trading firm GETCO and brokers Wedbush, Lime Brokerage, Morgan Stanley, Credit Suisse, Merrill Lynch, Citi, Deutsche Bank and J.P. Morgan.