In response to the competition from ECNs, at the end of 2002 NASDAQ introduced its own electronic trading mechanism, SuperMontage
, a fully integrated quotation and execution system that completely automated the trading process (essentially a hybrid system combining dealer and ECN quotes).
The new trading system, known as SuperMontage
, will aggregate quotes and orders providing access to more possible trades.
In 2002, Nasdaq introduced its latest innovation in trading called the 'Supermontage
Product examples include Thomsit P685, Pattex Supermontage
and Sista Solyplast SP 201."
In 2004, for example, NASDAQ's SuperMontage
executed only around 17 per cent of the trading volume in the companies listed on NASDAQ, while the NYSE executed 78 per cent of trading by volume in the companies listed on the NYSE.
(3) The extensive delays in launching the SuperMontage
system, for example, were at least partially due to the time it took to get SEC approvals.
New features include free simulated trading accounts, free ECN depth of books, free news, enhanced order entry, vast order types, automated routing capabilities, SuperMontage
for exchange-listed securities, button trading and customizable order entry.
Market fragmentation can be an opportunity if investors have access to data from major liquidity sources like SuperMontage
and ECNs, combined with a set of data management tools to help control that information.
A spokesperson for NASDAQ has said that the agreement will enable the organisation to focus on core business systems such as the upcoming SuperMontage
At the core of its new exchange system will be Supermontage
, a system that -- if it lives up to its billing -- will display the five best bids and offers for every stock, allow users to specify three different kinds of orders and allow for anonymity for those placing orders, an important consideration for major traders.
In the United States, NASDAQ's SuperMontage
will increase the market's transparency by introducing a quasi-central limit order book in over-the-counter (OTC) stocks.
The reduction in pricing errors after 2002 may be due at least in part to the increase in the pretrade transparency that resulted from the introduction of the NYSE's OpenBook in January 2002 and the phased implementation of NASDAQ's SuperMontage
from October through December 2002.