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Some Like It Hedged

BNP Asset Management's Pojarliev discusses a variety of options to address foreign currency exposures. Although there is no single best-practice solution for addressing foreign currency exposures, institutional investors have three main choices, he says.

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December 1, 2000

At Deadline

By John A. Byrne

Tech Mission

Ashton Technology, a trading technology vendor, has recruited Jefferies & Co. to provide strategic help and find investors for two of its subsidiaries, Universal Trading Technologies and Electronic Market Center. Ashton president Arthur Bacci says Jefferies was chosen for its experience with equity trading technology and its ideas for expanding the use of UTTC's VWAP matching system, iMatch.

"[Jefferies] will be able to introduce us to other participants," said the president of the financially struggling vendor. "Also, the [firm] is becoming a bigger player in VWAP trading." Ideal investors, according to Bacci, are broker dealers that want to make markets in VWAP securities or vendors of other trading systems. A joint venture is also a possibility.

In its latest 10-Q, or quarterly financial filing, for the period ended September 30, Ashton states it only has enough cash to last nine to 12 months. It has run through $10 million since September 30, 1999, leaving it with only $8 million. In mid-November, the company's stock was trading at less than a dollar, down from $7 a year ago.


The Securities Industry Association scolded the Securities and Exchange Commission for boiling best execution' down to speed and price in its recently approved trade execution disclosure rules. Others were relieved the rules are less likely to trigger new lawsuits against brokers for violations of their best execution obligations. But observers say that could ultimately dilute the purpose of the rules: disclosing the costs of trading to investors.

Starting on April 2, market centers such as Nasdaq dealers, exchange specialists and ECNs must provide in monthly disclosures such metrics as execution price relative to quoted price and the actual mark-ups or mark-downs incurred. Brokers must also disclose to customers on a quarterly basis the identities of the market centers to which they route, as well as whether they internalize or collect payments for order flow.

NYSE Specialists

Mergers among New York Stock Exchange specialist firms have reduced the total number from 55 in October, 1987 to 18, as of October 2000. Now Spear, Leeds & Kellogg is rumored to be in talks to purchase Benjamin Jacobson & Sons. A deal would create the largest specialist firm on the floor. That distinction is currently held by LaBranche & Co., following its purchase of Robb Peck McCooey Specialist. An official for Spear, Leeds declined to comment. An official at Benjamin Jacobson could not be reached for comment. Separately, Susquehanna Specialists, the tenth largest specialist firm, is on the prowl to acquire Lyden, Dolan, Nick and Co., the eleventh largest specialist firm, an NYSE insider confirmed. Susquehanna and Lyden did not return phone calls seeking comment. The acquisition of Lyden would make Susquehanna the sixth largest specialist firm at the NYSE with some 169 stocks.

The NYSE source reckoned that the number of specialist firms will probably shrink to five within the next three years. An increase in trading volume and volatility, along with the consolidation trend, has resulted in specialist survivors that have more capital.

Primex VIP

Leonard Mayer, the well-known Nasdaq trading technology pioneer, is leaving Charles Schwab Capital Markets to join Primex, where he will work on special projects in the U.S. and abroad. Mayer once headed up his own market making firm, Mayer & Schweitzer, which he sold to Schwab in 1991 for about $28 million.

Founded in 1998 with initial funding from Bernard L. Madoff Investment Securities, Primex, developer of the Primex Auction System, is also backed by Goldman Sachs, Merrill Lynch, Morgan Stanley Dean Witter, and Salomon Smith Barney. Nasdaq is slated to activate the Primex Auction System early next year. The Chicago Board Options Exchange signed a letter of intent recently with Primex for exclusive rights to use the system in equity options trading. Mayer joins forces with former top Nasdaq executive Glen Shipway, chief executive at Primex.