Matt Andresen knows how to fight a duel. The 29-year-old president of upstart electronic trading company Island was a Junior Olympics fencing champion.
"I never liked team sports because I didn't like sharing the glory or sharing the responsibility," Andresen says. "You could say I'm dysfunctionally competitive."
He graduated from Duke University, where he was far too busy fencing to pay attention to the stock market. Andresen took a year off from school to train in Paris for the '92 Olympics but ended up losing in the U.S. Olympic trials.
However, he recently crossed swords with the toughest competition on Wall Street, taking on Nasdaq and the New York Stock Exchange, the latter a constant reminder visible from his Broad Street office window in Manhattan.
At least it'll be a fair fight - or more fair than it might have been a couple of years ago. Thanks to rule changes by the Securities and Exchange Commission that enabled the emergence of Island and other electronic trading systems, Wall Street's old guard has been forced to open up. The board of the National Association of Securities Dealers, Nasdaq's parent, recently approved an ownership restructuring of its exchange, which could ultimately lead to an IPO.
The NYSE also plans a public offering.
And in an effort to increase Island's volume and loosen its ties with the NASD, Andresen and his lawyers have submitted an application to the SEC to become an exchange. Though its volume is still just a fraction of that of the NYSE and Nasdaq, Island has managed to surpass its most formidable direct competitor, Reuters-owned Instinet, in Nasdaq trading volume.
The Island platform provides a cheaper and more efficient place to execute trades. The company matches trades electronically and shows each order as it's placed and executed. Andresen likens the system to his favorite restaurant, the local Johnny Rockets burger franchise, where customers at the counter can see the grill.
"We provide a window into the market," he says. "Just like you can see your food being made at Johnny Rockets, you can see your trade being executed in real time on Island."
Andresen's passion for electronic trading was first fueled when, after a brief stint at Lehman Brothers, he got into daytrading. Investing his own money with a nervous young wife at home, Andresen was an Island customer before he became president in 1998.
The year ahead is sure to be eventful for Andresen. Last year showed that just about every financier, from venture capitalists to white-shoe investment firms, wants a piece of the electronic trading action. In late 1999, Softbank was reported to be courting Island, which is majority-owned by Datek Online, but so far no deal has emerged.
Andresen plans to focus on three key areas in 2000: advancing Island's exchange filing with the SEC, expanding from retail-only into institutional trading, and extending Island's hours from 8 a.m. to 8 p.m. daily to 24 hours a day, seven days a week.
As for rival stock exchanges, they'd do well to keep a close eye on Andresen in the coming year. The former fencer is lean, quick and sharp, and he plays to win.