September 30, 2014

Around the State- Southwest/ Tampa Bay- May 2001

Taking on Wall Street
A small Clearwater firm could become the only Florida-based stock exchange.

by Stacie Kress Booker

John Schaible and Mark Yegge, 30-something co-founders of Clearwater-based NexTrade, accomplished what many in the financial services industry thought impossible when they received approval from the Securities and Exchange Commission three years ago to become an electronic communications network (ECN).

An ECN, basically an eBay for stocks, brings buyers and sellers of stocks together online, charging a penny and a half per share for each transaction. NexTrade lists Dreyfus Brokerage Services and Brown & Co. as customers. Of the nine ECNs, NexTrade is one of the smallest and the only player outside the major financial centers of San Francisco, Chicago and Wall Street. "People told us it couldn't be done," says Yegge. "We were told 'no' about 4 billion times."

Schaible and Yegge now are trying to upgrade their ECN into an official stock exchange that would have the ability to trade listed stocks as well as over-the-counter shares, generating stock quotes and charging listing fees. NexTrade is revamping its trading systems to provide more information to investors and enhance its execution capabilities.

The move has big implications: While Nasdaq now considers ECNs such as NexTrade "family," it's an uneasy alliance. As an exchange, NexTrade will compete directly with Nasdaq.

NexTrade, however, may have little choice if it wants to grow. With a daily trading average of around 3 million shares, it's profitable but still small potatoes compared to Nasdaq, where about 2 billion shares a day change hands. It's even a lightweight compared to the two largest ECNs, Instinet and Island, which comprise about 11% to 15% of daily Nasdaq trading volume.

ECNs have captured 30% to 35% of Nasdaq share volume, but Dick Bove, director of financial institutions research at Raymond James, doesn't see much room to expand and doesn't think Wall Street will see any more ECN startups. Instead, he thinks, they'll consolidate and merge with each other. "ECNs have peaked in terms of market penetration," he says.

Market volatility isn't helping: If Nasdaq stays in its swoon, it's not likely ECNs will increase their share of overall trading.

What ECNs don't have, says Bove, is liquidity. They use their customers' capital to execute trades. In rapidly changing markets, the ability to provide liquidity can be crucial. For example, when the market is plunging, investors don't go to ECNs and wait for a potential buyer to get rid of their stock.

In addition, big-name Wall Street brokerages such as Goldman Sachs, Fleet Bank and others are co-opting the concept and buying up ECNs or starting their own, backed by their own huge capital resources. Independent ECNs such as NexTrade are left to find new ways to build business -- hence the move to become an exchange.

Schaible and Yegge think they can beat the odds again. And if the SEC signs off, Florida will have its first stock exchange. "It's not a question of if," says Yegge. "It's really a question of when." The SEC is expected to decide in 12 to 18 months.

In the News

Clearwater -- Eva-Tone, a family-owned manufacturer and distributor of print, audio and data replication, is building a $3.5-million, 120,000-sq.-ft. facility adjacent to its headquarters in Clearwater.

Fort Myers -- The Southwest Florida International Airport moved a record number of passengers and cargo in 2000: More than 5.2 million passengers and 31.6 million pounds of cargo for the 17-year-old regional airport. Passenger volume increased 6.3% from 1999. The Federal Aviation Administration ranks it as the eighth-fastest-growing airport in the country.

Largo -- The MEMS Technology Center ["When Small Is Big," March 2000, www.FloridaTrend.com] has officially opened in Pinellas County's STAR Center and is expected to be fully operational this month. The facility, the region's first dedicated to MEMS (microelectromechanical systems) technology, will research, develop and test the technology for military and private-sector applications.

Naples -- The Collier County Commission has approved a mixed-use, pedestrian-friendly, Mediterranean-style development in east Naples. It will include 180 residential units and 45,000 square feet of commercial and office space. The 14.5-acre site will be developed by Jack Antaramian, who also owns the property.

First National Bank of Naples is merging with Citizens Community Bancorp (Nasdaq-CCBI). The merger puts three CCBI branches under the F.N.B. umbrella, making F.N.B. the second-largest financial institution in the Naples area. CCBI will maintain its headquarters on Marco
Island.

Sarasota -- Developer Taylor Woodrow is relocating its North American corporate headquarters to the Lakewood Ranch Financial Park this month. Sixty employees will make the move to the 23,000-sq.-ft. office. The company is a subsidiary of international developer Taylor Woodrow.

Elite Employer Services, based in Sarasota, recently purchased Tampa-based Staffing Options, boosting the professional employer organization to more than 3,000 employees and $50 million in annual payroll. The company handles human resources duties, including payroll, benefits and workers' compensation insurance for its clients.

St. Petersburg -- Despite an economic downturn that is hitting high tech hard, Unaxis opened a 48,000-sq.-ft. facility. The company, formerly known as Plasma-Therm, develops and produces equipment used in semiconductor
manufacturing.

Tampa -- Historic Ybor Square is slated to open this month with 75,000 square feet of high tech-fitted office space at $20 per square foot, on par with lease rates of $20 to $22 in downtown Tampa. With ties to Ybor City's cigar manufacturing past, it's one of three historic sites undergoing renovations in the area. Orlando-based ZOM Development developed the site and will move its regional office there. Other tenants haven't been announced. The historic renovation qualified ZOM for a tax break of up to 20% of renovation costs, about $900,000, as well as a local incentive that freezes property taxes at the prerenovation levels for 10 years.

A third of the 100 retailers recently announced for upscale International Plaza mall will be new to the Tampa Bay area, including three of the mall's four anchors: Neiman Marcus, Lord & Taylor and Nordstrom. Dillard's, which also anchors nearby Westshore Mall, is the fourth. Other newcomers include Tiffany & Co., Christian Dior and Louis Vuitton. The $200-million center is expected to open in mid-September.

Providence, R.I.-based McGovern Noel & Benik has joined Holland & Knight's Providence office. McGovern Noel & Benik specializes in environmental issues as well as business, real estate, creditors' rights, commercial lending and healthcare. Tampa-based Holland & Knight is the nation's fifth-largest law firm, with more than 1,150 lawyers in the U.S.

Six-year-old electrical contracting firm Southern Power & Controls Corp. is the key subcontractor in two of the state's top 25 construction projects: A movable span bridge in Miami and the Hallandale Beach Boulevard bridge project. The privately owned Tampa company recently launched a design/build division to handle master plans, computer networking and more complex electrical jobs.

Tags: Southwest, Tampa Bay

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