Such systems already account for about 22 percent of Nasdaq trades. Island, one of the largest of these systems, is hard at work trying to become a full-fledged exchange. Rival Archipelago has launched an overseas expansion. Stephen Franco, an analyst at U.S. Bancorp Piper Jaffray, was surprised that Waterhouse paid as little as it did.
Disputes concerning the reporting of trades make it difficult to directly compare the two outfits.
Matt Andresen, president of Island, said Island is making money and did not need outside investment to thrive. But the company has big, expensive plans. It hopes to register as an exchange, and if successful could be the first for-profit exchange approved under new Securities and Exchange Commission rules. Such status would require that Island build a regulatory arm, and Andresen does not know how much that could cost. We're very serious about this.