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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April 30, 2002

At Deadline

By Editorial Staff

Relationships

*Deutsche Bank Asset Management (DBAM), seeking to simplify the lives of traders and portfolio managers, is going to cut the number of brokerage firms it works with around the world. And that means analysts must now work harder to obtain its business.

A published report says that the number of relationships will be reduced to 50 from 600. This, DBAM officials believe, will reduce the number of sales and research pitches its traders have to face. It also means that the big bank is going to take a more finicky approach to sell-side research. Analysts offering research services will be forced to offer a better quality of service to DBAM. A spokesman for DBAM didn't return phone calls as Traders Magazine was going to press.

Bargains

*Transaction fees have become the latest battleground between the American Stock Exchange and the Big Board in the war over exchange traded funds. The NYSE, which has been making a big push to obtain this kind of business, recently began trading these funds, but waived all transaction charges. Not to be outdone, Amex responded by waiving all fees on SPDRs, HOLDRs and other EFTs.

The Amex is taking the challenge from the NYSE very seriously, industry observers have said. That's because it has already lost the leadership of the Nasdaq 100 tracking stock, or QQQ, to Island ECN. Amex has had the most to lose from changes in the exchange traded funds business. It had been the leader in this field, with many systems programmed to send business to it. However, now that leadership is under attack.

Standards

*Nasdaq, in announcing its tougher corporate governance standards, took a swipe at the New York Stock Exchange. Nasdaq officials said that they no longer will allow exchange officials to sit on the boards of their member companies. Nasdaq Chairman Hardwick Simmons ended a letter to the Securities and Exchange Commission outlining new standards by writing, "As noted above, several of the changes under consideration would be more effective if adopted by all markets."

Nasdaq officials privately criticized NYSE Chairman Richard Grasso for sitting on the boards of some of the companies that are members of the Big Board. However, an NYSE spokesman said this has been a long-standing practice. "We do it to allow our people to have a unique view of their companies and to have a better insight into these companies," the spokesman said.