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September 30, 1999

Making the Grade: Trial by Fire

By Sanford Wexler

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King, who speaks in a twang that is distinctly Southern, added, "I think it helps to be able to understand financial statements and reports. But in the day-to-day transacting of buying and selling stocks, I think certain people are born with the ability to make split-second decisions on their feet."

Eve of Installation

King is answering a reporter's questions during a sultry Southern afternoon in Atlanta. He's soon to take office as the new chairman of the Security Traders Association (STA).

A native of Atlanta, King graduated in 1980 from the University of Georgia with an MBA in finance. But it took him more than a graduate degree to make the grade on the trading desk.

"I interviewed with Robinson-Humphrey, which was a much smaller firm back then, and they had an opening in the trading area," King said. He spent a few days observing the fast-paced trading environment and decided that this was where he wanted to make his mark.

For nearly 20 years King has been at Robinson-Humphrey, a 105-year-old Atlanta-based firm, now a subsidiary of Salomon Smith Barney Robinson-Humphrey has roughly 1,350 employees, including 1,000 retail brokers, and branch offices in New York and Boston.

King worked his way up the trading desk. Today he manages 20 market makers who trade over 300 Nasdaq and OTC stocks. The desk also trades listed stocks and is staffed with 15 sales traders, three retail sales traders, two agency traders, two convertible traders, and two 19c-3 traders. The desk traded 350 million Nasdaq and 167 million listed shares in August, according to AutEx, a Thomson Financial company in Boston. King said his desk handles between 8,000 and 9,000 Nasdaq orders daily. Clients include mutual funds, insurance companies, pension funds, and investment advisors.

The chairman of the STA is supposed to be a strong leader. King is well suited for that responsibility, according to people who know him.

Jim O'Neill, who is head of capital markets at Robinson-Humphrey, said that what makes Robert special is his extraordinary leadership skills.

"He is one of the best traders we have ever had," O'Neill said. "He leads by example. Rob has developed a strong group of traders that work together."

One of those traders, Billy Cahill, a senior vice president at Robinson-Humphrey, credits King with providing "a lot of flexibility and the room to be creative from a trading standpoint."

In recent years, electronic communications networks have radically transformed trading. Voice-mail has replaced the old-fashioned, telephone switchboard operator. Will ECNs soon make market makers obsolete?

That's a question privately nagging some Nasdaq and listed traders. They fear if Nasdaq and the New York Stock Exchange adopt fully-electronic limit order books, the days of their careers are numbered.

According to King, the securities industry will always need the human element.

"Individuals will always be necessary in this business to commit the capital when nobody else is around," King emphasized. "ECNs are great as long as you have two customers. If you don't have two customers and you are looking for liquidity and you are looking for speed of execution, then you are going to need somebody who is willing to commit the capital."