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June 2, 2009

In this Corner ...

Trading is such a dynamic area. Like a good boxer, traders and firms always need to keep their guard up and be aware of advances and change within their industry. After all, who wants to get caught flatfooted in a competitive world? At Traders Magazine, it's our job to bring you these changes every month-both in our print issue and in our daily email news alerts. Hopefully, we are keeping up our end of the bargain.

Michael Scotti, Editor

  

You'll notice there are more derivatives-related stories in this issue than normal. One reason is that Executive Editor Peter Chapman attended the options industry's big annual conference down in Florida last month. Besides a suntan, he came back with a number of stories. Of course another reason behind the increased derivatives coverage is that the products are becoming much more important to equity traders and investors.

Our Inside Trading section features a Chapman piece on the Boston Options Exchange's plan to enter the block options business. The other exchanges have similar products and BOX is looking to compete for institutional orders with this strategy. Trading options in large lots has been a dream among institutions for some time, and Pipeline Financial recently acquired startup 3D Markets to help make block trading in options a reality. Pipeline did not outline in detail its strategy in our story, but its apparent plan is to integrate 3D with its equity block business.

There is also discussion in this issue about how options exchanges plan to revamp their routing practices. Here is yet another example of how the options business is following in the footsteps of the equities markets, since the new routing arrangements between exchanges will no longer be centralized. Private linkages will be permitted-just like what happened in equities around the time of Reg NMS.

Our cover story also has a derivatives angle. It delves into some of the newest algorithms, which trade across asset classes simultaneously. You can read about this new wrinkle in James Ramage's story, which looks at how both hedge funds and institutions are using these newest tools in the algorithmic trading family for hedging and locking in profits.

The SEC's short-sale proposal has been a focus in Traders Magazine for the last two issues. Our cover story last month was the first leg of our coverage. It continues in this month's Rules & Regs section, which includes Nina Mehta's lengthy and insightful analysis. Mehta gleaned much of the color in her reporting by attending the SEC's roundtables in Washington, D.C. You can read more about the differences of opinion on this topic in her story. Enjoy the issue.

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