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December 1, 2003

A Master of Market Structure

By Kathryn M.Welling

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Don Weeden has spent virtually his entire career challenging NYSE and brokerage industry practices, pursuing square deals for investors. Early on, the issues surrounded the Third Market, in which Weeden and others traded blocks of stock for institutional investors, faster and cheaper than could be done on the exchange floor. He and the firm were instrumental in the bruising regulatory battles that led to

May Day, 1975 and the end of fixed commissions. He's been vitally engaged on myriad market structure and organization panels ever since. Doesn't pull punches. And has practical ideas about how to level the playing field. At times, I'm sure, I've seemed obdurate and obstinate as I've chosen to feature others in these pages over Weeden colleagues or clients with perhaps similar views or records. Chalk it up to intense sensitivity to the importance not only of true independence of thought, but the appearance thereof, in this day and age. [The author is editor and publisher of the independent minded welling@weeden, a service of Weeden & Co., Greenwich, Conn.]


The securities industry has certainly been making quite a spectacle of itself lately. Must really make you feel good about devoting much of your life to it, Don?

I am appalled. You know, when you get to the root of a lot of the improprieties that have taken place at the corporate level, you find that in a way, Wall Street was the source of many of the problems.

What did you make of what John Reed had to say to Congress?

I think what he said showed that he is still responding mostly to the exchange floor's desire not to have changes in the actual regulatory oversight of their activities. That will remain the same, and that-to me-will continue the artificiality of that regulatory process.


What has been disclosed in these investigations is that for a rather long period of time, the specialists have essentially been interceding improperly within the market.

Gee, you mean they weren't just stepping in only when heroics were needed to maintain an orderly market?

You're right to be sarcastic. Everybody has known what they were doing. But when decimalization came along, it exacerbated the problem because suddenly they could step in-to improperly take advantage of the order flow-in a manner that would have a negligible cost to them, even if they happened to make a trading decision that was to their disadvantage.

Sure, that cost was suddenly a penny. So "penny jumping" took off.