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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December 1, 2001

Two-Dollar Brokers Get a Break

By Gregory Bresiger

Two-dollar brokers may have just received a reprieve. In fact, these specialized brokers

are finding a new niche because Wall Street today operates under a decimal system that places a greater premium on the quality of order execution.

The turnaround for these brokers has come because of a shift in trading patterns by institutional buyside traders.

Thought to be no longer needed by some, buyside traders are now increasingly saying that they're using two-dollars brokers to execute their trades. These brokers are much more likely to protect the interests of buyside traders, protecting them from having their orders losing out to those who penny jump ahead. Decimal increments means it costs only a penny a share for a specialist to jump ahead of a large limit order, pros note. The priority now, for many institutional traders, is to ensure that the trade is executed, several traders said. The best person to do that, they added, is usually a two-dollar broker.