Commentary

Tim Quast
Traders Magazine Online News

We're All HFTs Now

In this guest commentary, author Tim Quast looks back at the history of HFT and how the market has evolved to where many firms now fit the definition of high-frequency trader.

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September 30, 2001

The Master Deskman

By Sanford Wexler

Some buyside traders have a background in Wall Street operations.

Anthony Iuliano, who knows operations like the back of his hand, built one trading desk from scratch and revitalized another. Now he heads the trading desk at The Glenmede Trust Company in Philadelphia, Pa.

His journey began in 1989 when he earned an undergraduate degree in business administration from Washington and Jefferson College in Washington, Pa. His next stop was at Morgan Stanley in New York. He worked in operations as well as in clearance and settlement.

"I was the grunt for everyone," said the 34-year-old Iuliano. "I started off doing the really undesirable jobs." He spent about five years at Morgan. He became a jack of all trades. He became an expert in retail brokerage and in the capital markets.

By 1994, Iuliano was eager to move to the buyside. He wanted to become a full-fledged trader. So he joined Mellon Equity Associates in Pittsburgh. At Mellon, he helped head trader John Keller build a trading desk from the ground up. "My responsibility was to set up the operational side," Iuliano said.

Three years later, he joined Brandywine Asset Management in Wilmington, Del. Within about a year, Glenmede offered him the opportunity to overhaul its trading desk. It was a challenging spot that Iuliano was happy to undertake.

Founded in 1956 and named after the Bryn Mawr, Pa., estate of Joseph N. Pew (founder of Sun Oil Company), Glenmede was originally formed to manage the charitable initiatives and assets of the Pew family. Today, it is one of the largest independent trust companies in the country and its clients include high net-worth individuals and institutions. The firm has some $20 billion in assets with 75 percent invested in equities, and 25 percent in fixed income.

Iuliano heads up a desk that comprises four traders. Seven portfolio managers handle the firm's institutional client base and some 25 managers are dedicated to serving its high net-worth clients.

Glenmede's trading desk performs some 700 trades each day for the firm's wealthy individual investors and about 25 for its institutional accounts. The desk has a roster of 50 broker dealers but only half are used on a regular basis.

Iuliano found his experience in operations invaluable while he helped to turn Glenmede's trading desk into a state-of-the-art facility. "They were way behind the times," he recalled. "They were writing trades down in a book instead of using an order management system."

Besides revamping the firm's order management system, Iuliano added fixed routing for the desk's smaller trades and helped install several information systems, including OASYS, Alert, Bridge, and Bloomberg.

Iuliano and his wife, Lisa, are the parents of a newborn baby boy named Dante. Awakening in the middle of the night is nothing new for Iuliano. You see, his desk also trades non-U.S. equities. "When I trade international stocks I sometimes get calls at three in the morning," he said.

On the desk, Iuliano has a hands-off management style. "I believe in letting people who have the trades do the trades," he said. "I don't believe in looking constantly over their shoulders. I feel that hampers their efficiency and ability to make the correct decision."

The biggest problems facing the buyside today are finding liquidity as well as the lack of transparency, according to Iuliano. "You don't know what's on the specialists' book anymore," he said. "People are holding back and doing larger prints. They are scared to put the whole piece out there and get it done. It's become more difficult to trade large blocks."

The increased difficulty in finding liquidity, Iuliano contended, can be attributed to the introduction of decimalization and the current market conditions. "Decimalization on the OTC side obviously hurts," he said. "They have to figure out whether they want to charge commissions or do the trades as net trades."

To Iuliano, trading Nasdaq and OTC stocks on an agency basis is a lot more preferable than trading on a net basis. "It's an explicit cost. You can show the client exactly what you paid," he said.

As far as the sellside's performance goes, Iuliano thinks "the sellside sometimes falls down on its obligations." But he added, "I also feel the buyside sometimes puts too many demands on the sellside."