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Tim Quast
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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, 2002

Another Tough Year At Cantor Fitzgerald?

By John A. Byrne

Last month, Cantor Fitzgerald, the government bond and equity-trading house remembered, in all its sad detail, the 685 employees who died in the Sept. 11 tragedy. In the immediate aftermath of that tragedy, Wall Street customers and rivals alike rallied behind Cantor.

It was that support, in part, that helped Cantor's profits recover in the fourth quarter. It also helped Cantor to deliver on a promise to contribute future profits into a special fund. Cantor expects this year to distribute some $25 million to grieving families of Cantor employees. But as the memory of Sept. 11 lingers, Cantor will have to depend more on gut business instincts to stay the course. It could be tough.

One executive, confiding privately to a reporter, said that professional turnover could be huge in the coming months. That's because some staff may now feel the time is ripe to finally quit; an emotional step to heal themselves.

Today, the firm's headcount is lower - about 475 employees work in New York, roughly half of its pre-Sept. 11 total. The automation of bond trading, at Cantor's eSpeed subsidiary, is one reason for the lower numbers. Overall, however, Cantor is strong. eSpeed had net income of $19.6 million in the second quarter of this year.

Cantor has new offices in the lower floors of a building at 57th Street in New York City. Phil Marber, president of Cantor's equities trading unit, is ramping up an operation that lost 124 of its 133 traders. July was a great month for Nasdaq trading (see chart).

Cantor also recently recruited a program trading team from Credit Suisse First Boston. Peter DaPuzzo, a Cantor executive, said the firm would like to act as a distributor pending a pickup in the Street's underwriting business. The firm is eyeing the market in deriviative products too, he added.