Three brokerages and a clearing firm have signed a letter of intent to build an electronic communications network.
Fidelity Investments, Donaldson, Lufkin & Jenrette, and Charles Schwab Corp. will use technology from Spear, Leeds & Kellogg, a market maker and major clearing firm, to create the industry's 10th ECN, a new breed of network that is rapidly changing securities trading.
ECNs anonymously match subscribers' buy and sell orders. They have garnered as much as 25% of the Nasdaq market.
The network, which has yet to be named, is to build upon the technology of REDIBook, the third-largest ECN, which is operated by Spear, Leeds & Kellogg.
The four partners, who would share equally in the proposed venture, would be able to pool their substantial order flows.