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July 15, 2007

Getting Both Sides

By Michael Scotti, Editorial Director

The history of equity trading is fascinating, whether one discusses the mechanics of the marketplace or the people. But with more electronic execution, however, the human aspect of trading recently has taken a backseat. You'll notice this month's cover story is about BIDS Trading, the new crossing network sponsored by a consortium of broker-dealers. I have mixed feelings about the decreasing importance of relationships and the continued growth of electronics. Trading has been blessed with many larger-than-life characters. I've had the privilege over the years of speaking with industry giants, men who personified trading like Don Weeden, Michael Bloomberg, Alan "Ace" Greenberg and John Mulheren, to name a few.

This month's interview with Chris Hynes in "Buyside Snapshot" reintroduced the name of another legendary trader, Boyd Jefferies. He built Jefferies & Co. into a third-market block-trading powerhouse. Hynes, a former Jefferies employee, raised the question of whether Jefferies & Co. would have survived as a firm had Boyd Jefferies not settled government charges that he illegally parked stock for Ivan Boesky. A small firm like Jefferies might not have withstood a long legal battle. By settling, Hynes said, Boyd Jefferies probably saved the firm and numerous jobs. Also, without a Jefferies & Co., what might have happened to Posit and ITG? They were then incubating at Jefferies and would later be spun off. "Boyd really took one for the team," Hynes said.

JonesTrading's Packy Jones, who worked at Jefferies & Co. in the late 1970s, said Boyd Jefferies was the ultimate trader. "He was one of the hardest-working guys I've ever seen," Jones said. He saw him at Jefferies already working the phones when he'd arrive at 3:30 a.m. (Pacific Coast Time) with the likes of a Carl Icahn or some other financier looking to build a huge position. "The greatest punishment they could have given him was to take him away from trading stocks," Jones said. And that's exactly what the settlement did. Jones recalled a few "Boyd-isms" that Jefferies would bark out to sales traders between puffs on a cigarette and sticks of Big Red chewing gum: "What do you mean, They're done'? They're never done!" or, "There's no such thing as a limit," as well as a variation, "Limits are for limited minds."

Boyd Jefferies died in 2001, but his legacy continues in this issue. ITG has decided to go self-clearing. It is breaking away from its longtime clearing firm, Jefferies & Co. Time marches on.