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September 30, 2000

UBS Warburg Creating Super' Market Maker

By Peter Chapman

UBS Warburg's acquisition of PaineWebber will create a Nasdaq trading powerhouse, making markets in upwards of 1,000 stocks, according to the head of UBS Warburg's Nasdaq trading desk in Stamford, Conn.

Jack Francis, Warburg's Nasdaq desk chief, says the new entity will add both stocks and traders following the integration of the two trading operations.

"We want to put our trading capacity in line with our research and banking capacity," Francis said. "We don't make markets in all stocks our research covers now."

Warburg currently makes markets in 340 stocks while PaineWebber has a roster of 450. After the merger, the combined organization will trade 600, excluding the overlap. Francis wants to ramp up quickly to 800, and projects growing the list to 1,000. In the period January 1 through August 31, PaineWebber traded 4.5 billion shares while Warburg traded 3.5 billion, according to Thomson Financial's AutEx BlockData

After the merger is completed, Francis will oversee a department of nearly 90 traders and assistants. That includes 50 pros in market making; 15 sales traders; 12 agency traders; five help desk staff; and seven large-ticket retail broker liaison staff.

Most of them would come from PaineWebber's desk in New York, assuming they relocate. Warburg currently has a 20-person market making team and seven sales traders.

PaineWebber's head trader, Pat Davis, has been assigned a post of "Nasdaq product manager," according to Francis. In this role, he would act as a liaison between the syndication department and the trading desk. Warburg's James Denonna will run sales trading.

Most of the PaineWebber trading staff have been offered posts at Warburg. That is testament to the different customer bases at each firm, observers note. Warburg has a core of very large institutions. PaineWebber handles retail and smaller institutions.

"We're completely complementary," Francis said. "In fact, we'll be a net buyer of bodies afterward." Francis is looking to hire ten market makers. A few sales traders are expected to lose their jobs, however.