Island Ecn - Measuring Up To Competition

MEASURING UP TO COMPETITION

Island ECN offers investors a variety of advantages. It provides the flexibility of the longest trading session available. Island begins matching orders at 7:00 am, before the market opens, and continues until 8:00 pm, hours after the market has closed. It is able to do business much faster than traditional markets, with a speed as fast as 3/100ths of a second, compared to several seconds for traditional markets. That speed can be the difference between executing or failing to execute an order. Finally ECNs such as Island have cut the cost of trading significantly, charging fractions of a cent per share instead of five to six cents charged by traditional middlemen.

Island ECN has also shown itself to be more reliable than traditional markets. Between 1997 and the end of 2001, its system did not experience a single shutdown as a result of intensive volume. It accomplished this through a unique computer system designed to sustain heavy trading volumes. Rather than relying on a single mainframe computer, Island's system distributes work among hundreds of linked personal computers. Each PC in the system performs a single function, for example receiving orders, matching orders, or canceling orders. At the same time, the PCs back each other up. If one fails, another one running the same function takes over. Island's systems are required to comply with SEC standards governing security, capacity and reliability.

The system twice succeeded when NASDAQ's own system failed. First on January 3, 2001, and again on April 18, 2001, when announcements of interest-rate cuts by the Federal Reserve led to sudden, high-volume in trading, NASDAQ computers experienced delays in delivering execution messages. While the NASDAQ delays were occurring on January 3, Island continued to handle more than 10,000 orders a minute without a slowdown. Island had its highest volume day to date on October 4th, 2001, executing more than 550 million shares. Island's systems have been also internally benchmarked at handling well over 1,000 executions per second.