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.

Traders Poll

Are you in favor of a pilot program and examination of the rebate system by the SEC?




Free Site Registration

May 26, 2005

At Deadline

By Editorial Staff

Morgan

*A group of eight traders bolted from Morgan Stanley for Deutsche Bank Securities. The departures from Morgan Stanley's equities unit are the latest in a series of resignations that began late last year. The resignations included Robert Karofsky, who was Morgan Stanley's U.S. head of cash equity trading and a 14-year veteran of the firm. At Deutsche, Karofsky was named global head of program trading and direct markets access. He will also run cash equities for the Americas with Deutsche's head of research sales, David Manlowe. Joe Ferrarese joined Karofsky in the latest exodus from Morgan. He will head Americas cash trading. Ferrarese is a 17-year Morgan Stanley veteran. He most recently ran the firm's NYSE floor operations. He also had a stint running the Nasdaq desk. Late last year electronic trading whiz Rohit D'Souza jumped to Merrill Lynch with six other trading technology execs.

Watchdog

*Buyside traders in London have a new watchdog. Industry veteran Shane Norman will head up a new transaction cost consultancy for software house Euraplan. Norman will advise pension plans on the trading performance of their money managers. The long-time fund manager and analyst will use data crunched by Euraplan's TradeShare system. Euraplan launched the TradeShare service last year to help pension plans compare their costs against market benchmarks. TradeShare also ranks money managers according to their trading performance. After a two-year investigation, the U.K.'s Financial Services Authority recently proposed new rules advocating more disclosure of trading costs. Norman has spent nearly 40 years in the securities industry in various capacities.

Reg NMS

*The debate over market structure, seemingly ended when the SEC narrowly passed the Reg NMS package, is not over. That's the fear of Security Traders Association President John Giesea. "It is not insignificant that following 14 months of debate there exists a greater divide today than when all this started," Giesea wrote in a memo to STA members. "I share a grave concern that moving forward on this rule [the best price/trade through rule] without the total unity of the SEC chairman and commissioners is, at a minimum, not the desired result. The risks to our markets are significant." Indeed, at the STA's Congressional Conference in Washington in April, it was clear the market structure debate was not over.

NYSE/NASDAQ

*Trading pros are watching the New York Stock Exchange's plan to buy Archipelago Holdings, parent of the Archipelago Exchange. The new entity, NYSE Group, valued at $3.5 billion, would be publicly traded. The surprise deal reflects competitive pressures in both the listed and the Nasdaq markets. The Reg NMS trade-through rule is expected to increase competition among listed venues. In buying Archipelago, the NYSE would eliminate a potential competitor. After the NYSE/Arca deal was reported, Nasdaq announced its purchase of Instinet and, most important, the acquisition of INET. This Nasdaq deal would leave Archipelago second in OTC business. Meanwhile, the ownership of the NYSE Group would be split 70 percent and 30 percent respectively, between Big Board seat owners and Archipelago shareholders. John Thain, chief executive of the NYSE, would be CEO of the proposed merged company. Arca CEO Jerry Putnam will be one of three co-presidents.