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August 31, 2002

On A Mission Impossible? The new STA chairman lauds SuperMontage, criticizes ADF and calls for unit

By Gregory Bresiger

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  • On A Mission Impossible? The new STA chairman lauds SuperMontage, criticizes ADF and calls for unit

One of the trading industry's new leaders has a busy year ahead of him. Here are some of the troubling issues that will be on his crowded plate: Convince ECN officials that SuperMontage will be a good deal and ADF will be an expensive nothing. Obtain vital rules changes from the Securities and Exchange Commission. And bring peace to the various parts of an often-contentious trading industry. And, to accomplish the latter, he will have to sell them on the idea that the Security Traders Association will, in fact, represent their various interests. And, while he is trying to accomplish all this, he will be leading an industry that has been floundering through the worst times since the early 1970s.

Welcome to the STA high command, Jack Hughes.

Hughes, 52, is the Security Traders Association's new chairman. He has an ambitious agenda for the year in which he will occupy the post. Hughes is senior vice president and director of Nasdaq and listed trading with Janney Montgomery Scott. He succeeds Michael Bird of Merrill Lynch as STA chairman. The difficulty of achieving most of his agenda can be seen in an issue such as ECN access fees. Hughes hopes the SEC will take on access fees, which are a sore point for many of his members but are acceptable to others just as they are today.

Access Fees

"I would love to see the ECN access fees eliminated. But if we can't do that, then I would want to see the fees made explicit in the quote," Hughes said. "There are also ECNs charging for SuperSoes access. And I would like to see those fees eliminated."

The securities industry veteran - he began as a runner for Merrill Lynch in 1969 - has served in various STA posts since the late 1980s with one break. He also believes Nasdaq's new SuperMontage is going to be a huge success. In a recent interview with Traders Magazine, he also wondered what is the point of the National Association of Securities Dealers' ADF [Alternative Display Facility]. Is there even a need for it, he wondered.

"I'd rather not see further fragmentation. It still boggles my mind that we need it [ADF] at all," Hughes said.

Hughes is incredulous because he believes that Nasdaq's new trading platform will provide a distinct advantage to all his constituents - from market makers to ECNs to specialists - so there should be no need for another place to trade.

"SuperMontage is a plan that is taking a market that is so fragmented and it is trying to unfragment it because it will benefit the investor," according to Hughes. For him, the benefits of the new trading platform will reach every segment of the business.

"If you come up with a system that can enhance execution of work for everybody, whether you are an ECN or not, and you can attract order flow regardless of who you are, that's an efficient system," Hughes said.