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August 31, 1998

Lessons in Building a Desk

By Michael L. O'Reilly

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  • Lessons in Building a Desk

Maureen Yeazel may be getting back to Europe soon. A majority stake in Yeazel's firm, Harbor Capital Management Co. in Boston, was recently acquired by the Dutch bank Fortis.

Fortis' Paris-based investment subsidiary, Fimagen, now oversees operations at Harbor Capital. Over the last few months, Fimagen has brought several Harbor Capital employees to Paris for consultations in U.S. business practices.

Yeazel has not yet been scheduled to revisit Paris a city she toured in a year abroad after graduating from Vanderbilt University in Nashville in 1981.

But Fimagen has sent several Paris executives to Boston to observe Yeazel's responsibilities as head trader at Harbor Capital.

"At Fimagen, they don't have traders. All of the portfolio managers trade for their own accounts," Yeazel said. "They want to find out how having a trading team will improve their business. It's something I can help them with."

Yeazel understands her role at Harbor Capital implicitly. She joined the firm in 1985 as its first trader.

At the time, Harbor Capital's portfolio managers handled $700 million in assets and traded for their own accounts. But as business became too busy for the portfolio managers to trade efficiently, the firm hired Yeazel, who was trading as State Street Research & Management Company in Boston.

"I was very young when I came to Harbor Capital, and it was a once in a lifetime opportunity to structure a desk myself," Yeazel said. "I just took a shot, and it all worked out."

In 13 years, the trading desk has grown to four traders, and the firm's eight portfolio managers now handle more than $6.2 billion in assets. More than 85 percent of those assets are invested in equities.

For Yeazel, the most difficult part of building the desk at Harbor Capital was changing the trading approach of the portfolio managers.

Previously, the portfolio managers handled and traded for their own accounts. Yeazel wanted the desk to bundle and coordinate portfolio managers' individual orders.

"Instead of a portfolio manager concentrating on one account, we now have policy meetings where all of the managers decide what to buy and sell together in all of the portfolios," she said. "Orders are planned and coordinated much better."

Yeazel sits in on the policy meetings, and is in charge of implementing the decisions.

Trading by stocks, Yeazel handles fewer orders. But the orders are larger. The larger positions allow the traders to establish positions quickly and to work more closely with sell-side traders.

"The portfolio managers were somewhat reluctant to give up control, but they realized it was in the best interest of the investors and the firm. But we needed to be sensitive with changes," Yeazel added.

In 1991, Yeazel implemented the Merrin Financial Trading System at Harbor Capital. The order-management system allowed the firm to monitor and route all orders electronically.

With Merrin, the portfolio managers electronically send orders to Yeazel's trading desk, and the traders can then route orders without writing tickets or typing order information. The system sends orders electronically to the floor of the New York Stock Exchange and to Nasdaq market makers.