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News & Updates - Friday, November 12, 2004

Liquidnet - Profile

HQ: New York City

Founded: November 1999 and launched in April 2001.

Management: CEO Seth Merrin previously founded VIE Systems, New Era of Networks and Merrin Financial. Big hitters on the board are topped by hedge fund all-star Michael Price.

Investors: Company has raised $29M to date, primarily from TH Lee Putnam Venture Partners.

Business Model: When a large financial fund wants to unload a big block of shares, it currently works with a brokerage that charges a fat commission to cut up the block into smaller, more discrete units. Liquidnet does an end-run by enabling buy-siders to sell big blocks to other buy-siders completely anonymously. In other words, its a peer-to-peer electronic equity trading that bypasses exchanges. Commissions are 2 cents per share vs. 5+ cents at traditional brokerages. Liquidnet currently has nearly 300 member firms. Company expects revenues upwards of $100M in 2004 up from $50M the prior year.

Competitors: NYSE, POSIT, Instanet, Harborside+., Pipeline Trading Systems.

Dirt: Slam dunk. No more subways for these guys. Taking on the Big Board with technology innovation is like taking candy from a baby.