The American Stock Exchange has chosen the order routing technology of Lava Trading to direct orders to other execution venues, as part of its compliance with Reg NMS best execution obligations.
The service was launched at the same time as the stock exchange’s new Auction and Electronic Market Integration platform.
“Lava has an ability to provide a stable and scalable environment to connect to the execution venues, which we are all becoming customers of,” says Antoine Shagoury, Amex’s chief information officer. “As Amex rolls out AEMI, one of the things we want to focus on is core competencies, and we want to make sure to partner with people who have core competencies on which we can depend. As we go into Reg NMS and look to become more of an automated marketplace, it was a natural choice for us to partner with Lava.”
Lava will provide AEM’s private linkage for outbound routing to other markets. Lava also provides similar services to the Boston Stock Exchange and the National Stock Exchange.
“Lava’s got what we think is the superior market-leading smart router in the equities business in North America,” says James Weber, Lava managing director. “What we’re trying to do is allow exchanges to take advantage of that smart routing technology, not just to fulfill their NMS obligations per se, but also to provide their clients with a true best-execution vehicle. For us that’s the core of our business.”
“This is not a surprise and something we will continue to see more of,” adds Joe Gawronski, COO of Rosenblatt Securities. “As the dated technology and rules of the Intermarket Trading System are abandoned and replaced by private linkages in a Reg NMS world, there are only a few players who are in a position to provide the infrastructure to the exchanges. Lava was the most successful of the smart-order routing companies to emerge as the fragmented ECN market structure of the 1990s called for aggregation solutions, so it makes all the sense in the world for Lava to leverage this expertise to provide the ‘route-out’ capabilities Reg NMS demands in its order protection rule.”