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April 25, 2006

STANY Copes with Change

By Gregory Bresiger

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Change is difficult. Change can be disturbing. Change is necessary.

Change seems to be everywhere in the trading business these days. "The whole universe of trading is changing and we have to keep up with its constant changes," according to Michael Santucci, the new president of the Security Traders Association of New York (STANY).

STANY, the Security Traders Association's largest chapter, has been going through some dramatic changes the last few years. The group previously had an almost exclusively over-the-counter, sellside membership.That is quickly changing. STANY, in the 1990s, once had a strong wholesaler representation in its ranks. That has dramatically changed.

"I think wholesalers as we knew them are no longer in this trading environment," says Santucci, who entered the industry some 23 years ago and has had stints as an over-the-counter trader and as a reporter at the American Stock Exchange.

Santucci is today a senior vice president of sales trading for Vandham Securities, a firm he joined last year.

"Speaking for myself, I think many people don't even want to be considered a wholesaler anymore. That's not a part of the business that they're looking to do anything with."


The losses in wholesaling have meant dramatic change at STANY and the rest of the trading industry. More change, STANY officials believe, will probably lead to the loss of more jobs, but many pros will be able to muddle through who take a flexible approach to the business. They must adapt themselves to new trading models and different kinds of trading, executives say.

Indeed, wholesalers, STANY officials privately concede, aren't the only ones at risk. And that could have a destructive effect on the organization, one that a few years ago did something that was previously unthinkable: It set up a job referral service to help newly unemployed members.

"We are concerned about our membership," Santucci adds. "With the new black box techniques, a desk can trade hundreds of stocks with one person. Things have really changed. When I used to trade over the counter stocks, you maybe had thirty or forty stocks on your panel," Santucci adds. But today, many STANY officials say, traders should be prepared for a time when desks are shrinking and technology is taking over many human functions.

"Traders," Santucci noted, "will have to be multi-operational." These industry changes, along with the sour markets of 2000-2002, have been felt in his trade organization, which is down about 35 percent from its peak numbers.

Today STANY has some 1,400 members. About 800 of them are sellside traders, with most of the rest of the membership coming from the buyside and compliance professionals. There are also some listed traders and some retired members.

Although Santucci emphasizes that the membership has been rising recently, the 1,400 membership is still quite a change from the high point at the turn of the century. That's when STANY had some 2,200.

"I think the trading industry will consolidate some more," he predicts. The consolidation will happen because firms are frequently seeking new models because of regulatory, technological and competitive pressures.

Living in the Past