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, 2002

More Traders Make Indy Research Pitch

By John A. Byrne

The small independent research houses are a bright spot in an otherwise bleak environment for traders. Blaylock & Partners, founded by Chairman Ron Blaylock, a former PaineWebber fixed income executive who once shot hoops at Georgetown University with Patrick Ewing, is one example.

The firm, which has opened an OTC trading desk in New York City, said it is getting attention from large mutual funds. That's thanks in part to the plunging reputation of research at some larger firms, it adds. "All the larger firms are under tremendous pressure from Eliot Spitzer, they are overstaffed so there is a pool of talent available, and the IPO calendar has dried up," said Jamie Barker, a managing director of equities at Blaylock, who was a former COO at Wasserstein Perella. "All the accounts we've told our story to have been very receptive."

Blaylock's research is in media, telecommunications, financial services and energy. The idea is to trade OTC stocks it covers in research. The firm, which has minority-ownership status, said it avoids rating stocks in which it maintains an investment banking arrangement. About 80 percent of coverage is divided evenly between large and small caps, the rest is in mid-caps.

Barker said he expects the desk to eventually become a "profit center." The OTC desk, which trades five names but plans to expand to 50, accounts for some 20 percent of Blaylock's equity trading volume. About 80 percent comes from listed flows. "We've hired 35 pros," Barker said. "The problem is we're running out of space, so we're moving to larger offices."