ECNs, sometimes no more than a basement full of computers, automatically match share orders brokers place electronically. These upstart networks have succeeded in snatching a sizable chunk of business away from Nasdaq. Mutual funds and other large-scale investors have expressed concern that the proliferation of ECNs is fragmenting the US equities market. Grasso, who has chaired the NYSE since 1995, appears unconcerned.

"There are nine ECNs today," Grasso said. "Those nine ECNs will become two or three. And they will become absorbed by players we don't see in the space yet." Internet heavyweights such asAmerica Online and Yahoo! will eventually absorb the remaining two or three ECNs, Grasso said. "The fundamental business is moving to financial data," said Grasso, who also described the NYSE as an collector and seller of financial data.

Grasso first talked about the NYSE's plans for an ECN in October at a Securities Industry Association conference in Boca Raton, Fla. He told reporters and industry executives that the electronic platform would be designed to execute retail investor orders of 1,000 shares or less.But the NYSE is also building a share-order matching system that will pair up small institutional investor orders of up 25,000 shares.

Until recently, regulatory obstacles have kept the ECNs from matching shares of NYSE stocks and focused trading over-the-counter stocks. Instinet Corp., a unit of Reuters Group Plc., executes trades of listed stocks. ECNs now account for about 30 per cent of the daily share volume on the Nasdaq, the No. 2 US Market. That is up from almost zero about two yearsago.

But the NYSE's recent decision to scrap Rule 390, a high-profile obstacle to trading listed stocks, and a plan to open up the system through which US exchanges talk to each other will make it easier for ECNs to take on the NYSE.

The NYSE's ECN, still under construction, will be automatically executing stock orders of 1,000 shares or less for retail investors by July, Grasso said. Floor brokers at the exchange will key orders into the ECN through wireless, hand-held devices. The Big Board will also use its ECN as a platform to launch an after-hours stock trading session later this year.

The NYSE will then launch "I Express," its share-order matching system for institutional investors, in early 2001, Grasso said. "We are an electronic market and we are an open outcry market," Grasso said. "Those are the polarities and we have many graduations in between those two extremes." The new technology is bound to change the way people work on the exchange's floor. Unlike the ECNs, the NYSE must balance theinterests of its floor brokers and its specialists, traders charged with maintaining orderly markets in specific stocks.

The rocketing growth of the Internet and subsequent explosion in online stock trading is restructuring the landscape of the securities industry. Exchanges, industry observers predict, will abandon trading floors in favour of computerized systems. Grasso, however, steadfastly maintains that humans will always play a role in the trading of stocks.

Some 92 percent of the orders the NYSE receives are sent electronically, but they still only account for half of the daily share volume, Grasso said. Orders phoned in by brokers still constitute the remaining 50 percent, he explained. If you look around the world, no equities system is completely without people," Grasso said. "...It's a matter of dissecting and knowing what technology does best and what people do best."