# Island ECN

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{{Short description|Electronic stock trading network}}
'''Island ECN''' was one of the first [electronic communication network](/source/electronic_communication_network)s (ECNs) established for the trading [equities](/source/equities) in the United States. Founded in 1996 by Datek Securities veterans [Jeff Citron](/source/Jeffrey_A._Citron) and Joshua Levine, Island executed its first trades in 1997.<ref name=islecn>{{cite web|title=The Island ECN, Inc. History|url=http://www.fundinguniverse.com/company-histories/the-island-ecn-inc-history/|publisher=Funding Universe|accessdate=2014-04-14}}</ref>

==History==
Prior to Island, Citron and Levine worked together at Datek Securities (now [TD Ameritrade](/source/TD_Ameritrade)).<ref name=datek>{{cite web|title=Datek Online Holdings Corp. History|url=http://www.fundinguniverse.com/company-histories/datek-online-holdings-corp-history/|publisher=Funding Universe|accessdate=2014-04-14}}</ref> Citron's background was in trading and Levine had experience with software development. While at Datek, they worked together to develop a software program called Watcher. Watcher was one of the first programs to provide real-time quote and electronic order capabilities for trading [Nasdaq](/source/Nasdaq) stocks through the [Small Order Execution System](/source/Small_Order_Execution_System) (SOES). In 1995, Watcher was augmented with a system called "Jump Trades" that let users of Watcher skip the Nasdaq intermediary and trade directly with each other.<ref name="darkpools">{{cite book |title = Dark Pools: High-Speed Traders, A.I. Bandits, and the Threat to the Global Financial System |last = Patterson |first = Scott |year = 2012 |publisher = Crown Publishing |isbn = 978-0307887177}}</ref>{{rp|116}}

On February 9, 1996, Levine announced the launch of Island.<ref name="darkpools" />{{rp|117}} Unlike the existing [Instinet](/source/Instinet) system, which still used human traders to match buy and sell orders,<ref name="darkpools" />{{rp|110}} matching on Island was fully automated using an automated [order matching system](/source/order_matching_system). Island published an electronic feed called "ITCH" of all trades in the system, and used a protocol called "OUCH" to place orders. The data feed was accessible for free, an innovation over the tightly controlled data for traditional exchanges, and trading fees were significantly lower than on Nasdaq.<ref name="darkpools" />{{rp|119–120}}

One of its first customers was [South Carolina](/source/South_Carolina)-based Automated Trading Desk, an early [algorithmic trading](/source/algorithmic_trading) firm. Island grew quickly, accounting for almost half of all trades on Nasdaq's SelectNet system by late 1996, and handling $22.1&nbsp;billion of transactions between July and September of that year.<ref name="darkpools" />{{rp|122–124}} By 1998, it had become the second-largest ECN, after Instinet, with 20% of the market.<ref name="darkpools" />{{rp|154}}

In October 1999, Citron was forced out at the behest of president Ed Nicoll, who was worried that Citron's connections to Datek—then under investigation by the [Justice Department](/source/United_States_Department_of_Justice)—could cause the firm legal issues. In December 2000, Island became a separate company from Datek, with Matt Andresen as CEO.<ref name="darkpools" />{{rp|162–166}} Island was an early hub for [high-frequency trading](/source/high-frequency_trading) firms like [Getco](/source/Global_Electronic_Trading_Company) and [Tradebot](/source/Tradebot) in the early 2000s.<ref name="darkpools" />{{rp|193–195}}

Instinet acquired Island Exchange in 2002 and renamed the [trading platform](/source/trading_platform) to [Inet](/source/Inet).<ref name=acqui>{{cite news|last=Bayot|first=Jennifer|title=Instinet Plans to Acquire Island ECN for $508 Million in Stock|url=https://www.nytimes.com/2002/06/11/business/instinet-plans-to-acquire-island-ecn-for-508-million-in-stock.html|accessdate=2014-04-14|newspaper=New York Times|date=June 11, 2002}}</ref>

== See also ==
* [Electronic communication network](/source/Electronic_communication_network)
* [Electronic trading platform](/source/Electronic_trading_platform)
* [Instinet](/source/Instinet)
* [Order matching system](/source/Order_matching_system)

==References==
{{reflist}}

Category:Electronic trading platforms
Category:2002 mergers and acquisitions

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Adapted from the Wikipedia article [Island ECN](https://en.wikipedia.org/wiki/Island_ECN) by Wikipedia contributors ([contributor history](https://en.wikipedia.org/wiki/Island_ECN?action=history)). Available under [Creative Commons Attribution-ShareAlike 4.0 International](https://creativecommons.org/licenses/by-sa/4.0/). Changes may have been made.