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July 5, 2006

At Deadline

By Staff Reports

Hudson Moving On Up

*Look out, UBS. Watch out, Knight. Jersey City-based Hudson Securities, which has just moved to much bigger digs down the block, expects to double its staff of sales traders and also add to its position trading numbers in the next six to 12 months. That will make it a wholesaling force that can play in the dealer big leagues, according to Hudson's top brass.

"Others are cutting back. But we're basically optimistic about the business," Hudson Securities CEO Marty Cunningham told Traders Magazine. He says that Hudson, will have 80 sales traders and 40 position traders by next spring. The expansion comes just a few months after Ken Pasternak, former Knight Capital Group chief executive officer, bought a stake in the firm (See Industry Watch, February).

Cunningham, a former Schwab Capital Markets trading exec who bought Wien Securities in 2004 and re-named it, said his new trading floor is "state of the art." The 26,000 square foot floor was built by Schwab, which later abandoned it after its acquisition by UBS.

Hudson's old floor was 8,000 square feet. Hudson trades about 2,500 OTCBB names and 2,300 Nasdaq names. Cunningham says that Hudson will be adding about 5,000 new stocks over the next year, including listed, NMS, pinks and bullies.

-Gregory Bresiger

Reg NMS Delays Specified

*The Reg NMS trade-through rule will be phased in over a year from October 2006 to October 2007, the Securities and Exchange announced at presstime. The new deadlines came amid admissions that the original June 29th deadline was unrealistic (See Washington Watch for more).

Completion of the phase-in compliance with the trade-through rule is now set for October 8, 2007.

This October, the SEC will require final technical specifications for Reg NMS compliant trading systems of all automated trading centers that will be part of the pilot stock phase. Some 100 NYSE, 100 Nasdaq and 50 Amex stocks will be part of the NMS pilot. It is slated to begin in May 2007 and run to July 2007. The SEC, in a press release, said the step-by-step approach would allow traders to adjust "in the least disruptive and most cost effective manner possible."

-Gregory Bresiger

Recapturing Lucent

*The New York Stock Exchange regained some of its lost market share in the trading of Lucent. On May 12, the Big Board began a five-month pilot program permitting trading in shares of Lucent via its Direct+ automatic execution platform in amounts as large as 1 million shares.

Over the course of the next week, the New York saw its market share in Lucent jump to over 50 percent. That compares to about 40 percent in the days preceding the pilot and about 34 percent in the first quarter. If the trend continues, it will mark a significant turnaround. Most trading in Lucent, one of the Big Board's most liquid stocks, migrated to the New York's electronic competitors a long time ago. On May 12, the NYSE said, about 17 million shares of Lucent traded via Direct+. The turnabout is also reflected in Nasdaq's market share numbers. Nasdaq saw its share of Lucent trading tumble from an average of about 51 percent in February to 34 percent on May 17th. Those figures include shares matched on Nasdaq's book as well as shares internalized by market makers.

-Peter Chapman