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Cover Story: Mayer & Schweitzer's Black Box and New Science

Traders Magazine, November 1999

John A. Byrne

The order handling rules left Mayer & Schweitzer in the same tight corner as other Nasdaq market makers. Spreads narrowed, initially on the most heavily traded stocks, while profits margins contracted. Mayer, the most profitable unit of Charles Schwab & Co.'s Capital Market & Trading Group, saw the number of profitless trades rise - from 10 percent of overall trades to about 25 percent today. The rules made trading more complicated and even harder to translate into a profitable solution.

Enter Lon Gorman, a hard-driven trading veteran who had just ended a career as head of global equity trading at First Boston. Gorman was headhunted to reinvent not only the Mayer money machine but also the whole Capital Markets unit, which he now runs. Gorman brought his analytical approach and his unquenchable drive for success.

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