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July 31, 1998

A Trader's Kind of Trader

By Michael L. O'Reilly

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  • A Trader's Kind of Trader

Paul Pantalena likes to let Wall Street work for him. Pantalena, head trader at Columbus Circle Investors in Stamford, tries to build strong relationships with the broker dealers his desk works with. By trusting certain brokers on the sellside, he feels confident his desk can get the best execution possible.

"My philosophy is that it's a partnership," Pantalena said. "We don't want adversaries. We want the brokers we deal with to be our partners, an extension of Columbus."

Last year, Pantalena's desk worked trades to 140 brokers. But his desk dealt closely with less than 50 of them.

"You have to really work to build strong relationships. Knowing the other side is one of the keys to trading," he said.

Pantalena likes to have his orders traded quickly, helping maximize a portfolio manager's expected return. To have a trade executed quickly, it is important to trust a broker with information, Pantalena said. More than 90 percent of the orders on his desk get executed within the day they are received, he added.

Pantalena claims his desk gets better execution from brokers by being up front with order information.

"You need to be open and direct with a sell-side trader," he added. "A broker will work harder to get you best execution when you're up front and a good partner."

Pantalena has tried to structure his desk with the same open, trusting philosophy that characterizes his dealings with brokers. Pantalena, two senior traders and one junior trader handle executions for the seven Columbus portfolio managers overseeing the firm's seven mutual funds.

Columbus is a subsidiary of the Pacific Investment Management Company, a Newport Beach, Calif.-based institutional money manager with more than $125 billion in assets under management. (Columbus has $10.5 billion in assets under management.)

Pantalena has been at Columbus since 1993, and has headed the desk for the last three years. His goal when taking over the desk was to structure a good environment for his traders.

"You're on the desk almost as much as you're at home, so I want my traders to be comfortable," Pantalena said. "I don't lead with an iron fist. I give my traders key responsibilities and trust that they do a good job."

His traders handle all products, not specializing in specific areas of the industry. Pantalena wants his desk to understand many aspects of the market, and working across product areas helps bolster that understanding.

When he took over the desk three years ago, one of his first initiatives was getting the trading desk involved in meetings with other departments at Columbus. Pantalena's desk now sits at meetings almost every week with portfolio managers and the research department. He said knowing how other departments approach their business allows the trading desk to be more efficient with orders.

"Each ticket has an objective," Pantalena added. "You can't always meet that objective if you don't know what it is."

Pantalena is also implementing a new order-management system that will eliminate much of the clerical work that can bog down the desk. He expects the system which he declined to name to go live in October.