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January 13, 2009

From Curb to Garage

By Michael Scotti

Beginning a new year usually brings optimism-the anticipation of more prosperous times ahead. That also applies to equities pros, as they, too, look forward to what's next for 2009. Will volumes stay strong? Will block trades make a comeback? Can big brokerage firms regain their mojo? Will the recession lift midyear, as many predict?

We also have a new administration in Washington that built its entire campaign around change. We shall see how this impacts regulation, as the Securities and Exchange Commission has taken more than its share of criticism for lax enforcement. You can be sure that Traders Magazine will be covering many of these issues, and a myriad of other topics as the industry continues to evolve. Stay tuned.

This month's cover story reintroduces a familiar place, the American Stock Exchange. The Amex, called Alternext these days, is under the wing of NYSE Euronext. The new Amex hopes to make tight markets with better technology for its mainstay of small-cap stocks. There's much optimism is some circles that Amex can rebuild its market share and footprint in these less-liquid names.

After NASD acquired Amex in 1998, it let the exchange languish and sold it back to the Amex members in 2004. Now the New York, which closed on the Amex in October of last year, is taking its shot. The sweet irony, of course, is that the Amex was formerly known as the Curb, as traders bought and sold securities outside the NYSE. That was the case until the NYSE basically said, "Hey, you guys need to get a place of your own." They did, and more than 80 years later, they've finally been invited to the Club and let into the NYSE's building.

Jamie Selway also offers his annual predictions on market structure. This marks Selway's fourth such effort in the magazine, and his picks are sure to trigger much discussion within the industry. Hats off to him for his willingness to go out on a limb. The piece not only tells where Selway thinks things are going, but also how his predictions for 2008 panned out.

Remember block trading? We've got a story on how the so-called block trading systems saw their volume fall during the volatile period of September and October. James Ramage's story uses data from TABB Group that is further supported by practitioners' comments. Another feature covers how new technology is being introduced that takes away some of the functions sales traders provide in terms of color and trading ideas. This is occurring at a time when the amount of high-touch trading is rising, due to volatility. Yes, 2009 should be another interesting year. Enjoy the issue.

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