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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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November 1, 2003

Top Wall Street Execs Press for NYSE Reform

By Staff Reports

The New York Stock Exchange's enemies and critics were out in force at the Security Traders Association annual conference in Scottsdale, Arizona.

Securities and Exchange Commissioner Cynthia Glassman complained that the Big Board's recent controversies have "raised serious questions about self-regulation." Glassman also wondered if the NYSE's trade through rule unfairly helps the exchange. "I believe there are strong arguments for modifying the trade through rule," according to Glassman.

A spokeswoman for the Big Board later noted that the exchange's dominance in the trading of its own stocks is the result of a market model that creates "the best price 94 percent of the time."

After Glassman, there were more spitballs thrown at the Big Board. This time it was Ed Nicoll, Instinet CEO, one of the NYSE's most bitter rivals, charging that the Big Board's floor trading system is rife with "hidden costs."

An official of Archipelago also complained that the trade through rule amounted to "a monopoly protector." Added Michael Cormack, president of Archipelago, "We must allow the benefits of competition to break the old boys' club."

Nevertheless, Catherine Kinney, co-president and co-chief operating officer of the NYSE, defended the system of self-regulation. She noted that five large specialist firms were recently sanctioned by the Big Board. She added that this proved that the NYSE's regulatory function is "vigorous."

One speaker took it on the chin himself from an attendee. Instinet' s Nicoll listened as Aldo Parcesepe of Bear Stearns criticized his firm for charging access fees. Nicoll, although taken aback, defended these fees as a legitimate part of his agency business.