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April 30, 2003

At Deadline

By Editorial Staff


*The Alternative Display Facility is approved to trade Nasdaq stocks through the end of next January, Securities and Exchange Commission officials recently decided. The National Association of Securities Dealers, which owns the ADF, had initial approvals for the ADF pilot until April 24, 2003. But the extension of the project for several more months was based on the idea that only Nasdaq entities will continue to be traded.

"A proposed rule change filed by the NASD extending the operation of the ADF pilot for an additional nine months through January 26, 2004, has become effective," the SEC wrote. The SEC also asked for comments on the ADF, which has its share of critics and supporters in the trading industry.


* The New York Stock Exchange's liquidity quote product can now proceed. But that's with the conditions added by the Securities and Exchange Commission. The NYSE accepted them and said it will soon launch the project. The key issue for NYSE officials was ensuring that Liquidity Quote is credited to the Big Board and differentiated from retail-sized best bids and offers. The idea came out of the decimalization pressures on institutions. These institutions have been looking for more meaningful quotes.

The revisions to the plan came after Bloomberg, the Philadelphia Stock Exchange and others had raised some objections to the original Big Board proposal. They said that NYSE vendor agreements would prohibit vendors, and other data feed recipients that want to redisseminate the data externally, from consolidating the information from other markets or trading systems.

Small Firms

* Small broker dealers continue to complain that they are short changed by the National Association of Securities Dealers. Another attempt is underway to represent them through their own trade group. Or so says the founders of a new broker dealer group, which is yet unnamed. The group would be based in New England, but its membership would not be limited to the region. Willis Ricco, a partner at a law firm in Providence, Rhode Island, is one of those pushing the idea. He is the former head of the NASD's Boston District Office.

Some of the complaints of smaller broker dealers have included their reduced role in self-regulation. Many officials of the smaller firms say that this has been going on since the issuance of the SEC's 1997 21A report, which said the NASD was not a tough enough self-regulator. There have been attempts to form broker dealer associations for smaller firms in the past. But they have usually failed.


* At least one trading industry executive balked at Nasdaq's recent insistence that the duties of chairman and CEO be split. Sources say that Robert McCann, a former Merrill Lynch executive and a finalist in the stakes to replace Nasdaq chairman and chief executive Hardwick Simmons, had been interested. However, McCann, sources said, didn't want to report to a non-executive chairman. And it is also questionable if McCann would have been able to serve with Greifeld, a well-respected SunGard executive, who was selected as Nasdaq's next chief executive and president.

H. Furlong Baldwin a Nasdaq outside director, was also tapped as the next chairman. McCann, reportedly, also disagreed about Greifeld's vision of how Nasdaq should make the transition to an exchange.