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Pacific's New Trading System Gets OK

September 19, 1997| From a Times Staff Writer

The West Coast's only stock exchange says it plans to launch a new super-computer-driven trading system in 1998, as the battle for customer orders among the nation's exchanges and other trading networks continues to rage.

The San Francisco-based Pacific Exchange, which also maintains a trading floor in downtown Los Angeles, said it received Securities and Exchange Commission approval on Thursday to operate the OptiMark System, a new trading program that will automatically formulate, match and execute investors' stock trades.

The Pacific said it expects to have the system running by spring.

The OptiMark System is an order-matching system designed to improve trading results for investors large and small, the Pacific said. The system, run on a super-computer, is described as "three-dimensional" because it can represent "degrees of investor satisfaction, or willingness to trade, at each price and size" of a stock order, the exchange said.

Many large investors have turned in recent years to trading systems that allow them to trade with one another, anonymously, and without the interaction of a brokerage "middleman"--thus lowering trading costs.

The SEC, in approving the Pacific's system, said it "appears principally designed to meet the demands of sophisticated portfolio managers and other market professionals implementing complex trading strategies."

But the SEC added that the Pacific system also "is designed to allow retail customers . . . to interact with institutional trading interests," which could afford small investors better trading execution.

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