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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April 21, 2005

A Portrait of the Artist

By John A. Byrne

The oil portrait hanging in the entrance of Nasdaq's MarketSite building catches the eye. Frank Zarb, the former Ford Administration energy czar looks down, a tad shrewdly, at visitors who dare today enter this Times Square landmark. The supersized portrait is really a personal statement from Zarb, a powerful man who we all know better as the former chairman and CEO of Nasdaq. It was his vision that led to the MarketSite, a vision that attracted early criticism, but then later drew praise. The return on this crap shoot investment was incalculable. Zarb was essentially recruited by the former SEC chairman, Arthur Levitt, to complete his agency's reforms of the dealer market. Zarb, while obediently fulfilling the mandate, took Nasdaq on a spending spree at home and abroad. Who could blame the man? Nasdaq was expanding giddily. As far as Zarb could tell, it was a classic case of grow or die. But the party was over after the bubble burst. Zarb was replaced by Hardwick Simmons, the former Prudential CEO. Wick's tenure, to say the least, was controversial. A restive board - and an influential group of investors led by Warren Hellman - had enough of the nonsense. It recruited a new CEO, an executive who had a stellar record in operations and the minutiae of trading. This man, Robert Greifeld, is still shaking up Nasdaq some two years later.

That brings us to the Cover Story, which closely examines Nasdaq as a trading market and a business with low-cost competitors. Nasdaq is at a crossroads, having dumped some excess baggage. Greifeld had to make tough choices, shuttering various operations and trimming expenses. As this Cover was prepared, I spent an afternoon interviewing Greifeld in Nasdaq's offices at One Liberty Plaza in New York City. It was a big surprise. I had expected a rather stiff executive who'd floor me with mind-numbing stats and market reg data. Yet Greifeld's human side came across as he joked about his knee injury, but looked forward to skiing in the Catskills with his family, and then spoke of his affection for the Irish band Black 47. Actually, the interview tried to come to terms with change. "Limit order display," said Greifeld, "was guessed to be the demise [of the dealer market] and, in fact, the market did well. Decimals was the bullet you couldn't dodge." Earlier, yours truly took a ride to inspect Nasdaq's data center in Trumbull, Conneticut, accompanied by Nasdaq PR executive Silvia Davi, and reporter Aaron Luchetti of the Wall Street Journal. It was set up as a fact-finding tour but felt more like a mission in search of weapons of mass destruction. Aside from the impressive display of technology, a separate image caught my eye in Trumbull. A portrait of another man, Joe Hardiman, Zarb's predecessor at Nasdaq, hung on the wall. Back to the future? Where, oh where, was the portrait of Robert Greifeld? Don't worry, promised Bethany Sherman, Nasdaq's senior vice president of corporate communications, "We're getting an electronic portrait of Bob." You might as well laugh as cry.