SunGard Brokerage Services is to introduce a ten per cent price cut for users of its Brut ECN, increasing pressure on Nasdaq and rival ECN Instinet.
The new structure will offer high volume customers a take-out rate (charge for removing liquidity from the Brut book) of $0.27/per one hundred shares executed, representing a 10% reduction off prevailing market rates and a 30% decrease off the fee-rebate spread.
Brian Hyndman, president, Brut, says: "By offering our clients and the industry a lower take-out rate we are lowering trading costs and creating a more optimal marketplace for all industry participants."
The cuts spark the possibility of a further damaging price war among rival electronic trading networks which are already operating on wafer-thin margins as they seek to attract and retain liquidity in frictionless markets.
SunGard says Brut's market share has grown from four to eight per cent since it acquired the exchange in August 2002.
The ECN recently made a multi-million dollar investment in Sun Microsystems technology in order to upgrade its infrastructure, improve its speed and increase capacity from two million to 12 million orders per day.
Hyndman says being part of SunGard has allowed Brut to maximise efficiencies and reduce its cost structure. The ECN uses the vendor's Brass order management system and Phase 3 securities processing software and also recently partnered with SunGard subsidiary EnForm to develop a roadmap to process up to 30 million orders per day.