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February 1, 1998

Merger Rumor

By John A. Byrne

With smaller profit margins hurting the payment-for-order-flow business, some industry experts are waiting for the first big merger among major Nasdaq wholesalers. Already, rumors are swirling on Wall Street that Nasdaq powerhouse Mayer & Schweitzer and Jersey-City based competitor Herzog, Heine, Geduld may merge.

According to sources close to Herzog's trading desk, Mayer is negotiating a purchase of Herzog. The sources said that the acquisition was not imminent, but expected a deal to be completed by year's end.

E.E. "Buzzy" Geduld, president of Herzog, said there was no truth to the rumor. A Mayer spokesman had not returned calls at press time.

A combined Mayer and Herzog would be a formidable giant. Mayer and Herzog were ranked first and second, respectively, in the AutEx year-end rankings of Nasdaq and over-the-counter volume for 1997. Mayer, a New York-based Charles Schwab Corporation affiliate, had an advertised trading volume of 12.4 million shares, according to the AutEx 1997 rankings. Herzog had a 1997 advertised volume of 11.08 million shares.