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July 31, 2001

Troublesome Time For Stock Traders

By Sanford Wexler

The shaky stock market is clouding the employment outlook for traders.

Some of the nation's largest market making firms, including Knight Securities and Merrill Lynch, are swinging the ax.

One firm blamed a changing regulatory environment for its woes. W.R. Hambrecht in San Francisco plans to reduce its staff by about 20 percent -- from 215 to about 165 -- mostly in the firm's trading area. The firm said the introduction of decimal pricing was damaging the economics of trading stocks. The firm will scale back the number of stocks traded from 200 to about 80.

Some pros said the layoffs should be put in perspective. "I think it's all relative," said Dennis Green, head trader at Legg Mason Wood Walker in Baltimore."I think a lot of people bulked up during the big volume days of the first five or six months of 2000. The question is are they laying off the people from that time?"

Aldo Parcesepe, head of Nasdaq trading at Bear Stearns agreed. "Wall Street usually hires [heavily] at the top of the market and fires [heavily] at the bottom," he said. "Everybody is waiting for the cycle to turn so they are holding on to as many employees as they can."

Some are maintaining the status quo. Hedi Reynolds, head of OTC trading at Morgan Keegan in Memphis, Tenn., said her firm is getting through the uncertainly and has no plans to shrink its trading desk.