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November 11, 2008

Hooked on Trading Early On

By Gregory Bresiger

Peter Driscoll, senior trader on the active equity desk at Northern Trust in Chicago, sees a full agenda ahead as incoming chairman of the Security Traders Association in 2009. Driscoll takes the reins at STA on January 1. Among the top issues that he and STA expect to wrestle with during his tenure are short selling, Reg NMS, and coordinated openings on the exchanges.

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On the latter issue, he wants to persuade exchanges to work together on common openings, so traders won't be confused by disparities in opening prices. This can mislead investors, he says.

"The de-minimus opening is generally picked up by the quote vendors as the opening price and causes confusion-even among professional money managers," he says. "We're concerned."

Driscoll also hopes that regulators will not impose dracionian new short-selling rules, but will more actively enforce the current Reg SHO as the better way of eliminating naked short selling. Reg SHO isn't working, say critics, who are calling for new rules. But Driscoll says new rules limiting short selling aren't needed. Instead, the current rules should be more effectively enforced.

Still, possibly the most important issue will be persuading the Securities and Exchange Commission to reconsider Reg NMS's Order Protection Rule (OPR).

Driscoll claims that the trade-through rule is ineffective, doesn't protect investors and reduces liquidity. OPR was designed to ensure the public investor gets the best price in a fragmented marketplace.

"You've pretty much taken care of the problem via connectivity. But now you have a rule out there with more than 17 exemptions and exceptions, which is very difficult to enforce," he warns.

Dealing with trading issues and rules are familiar terrain for this son or a trader. At an early age, Driscoll was fascinated by his father's work. He operated a trading firm on the floor of the Chicago Stock Exchange (CHX).

"I was pretty much hooked on trading at an early age. I started separating trade tickets on my father's bed when I was six years old," says the 49-year old Driscoll. Growing up, Driscoll spent his summers working at the family firm.

After achieving several advanced degrees, he took over the family business, T.C. Driscoll, after his father retired. Driscoll spent 25 years at the CHX.

Driscoll left the floor to join the buyside eight years ago, moving to Northern Trust. He reports to Kevin Connellan, head of the active equity-trading desk.

Why, after a quarter of a century on the CHX, did Driscoll join the buyside? Essentially, Driscoll says, he could see the tide turning. He notes that the buyside has taken greater control of the trading process in recent years.

But the issue for Driscoll over the next year is whether the STA can more effectively make its voice heard in the rule-making process.

So will Driscoll win all of the STA's battles? Not likely. But still, whatever the outcome, Driscoll, the middle-aged professional, will be no different than Driscoll the schoolboy: He's hooked on a profession that's in his blood.

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