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November 10, 2009

Firm Sees Bright Future on Floor

By Peter Chapman

Also in this article

  • Firm Sees Bright Future on Floor

They say communication is the key to a successful relationship. At Cuttone & Co., an institutional brokerage with one of the largest staffs on the floor of the New York Stock Exchange, that old maxim is gospel. If the firm isn't communicating well with its customers, it's not doing its job.

Keith Bliss, Cuttone & Co.

And that's a big reason why Cuttone plans to consolidate all of its trading on the Big Board floor once the exchange completes an overhaul of the broker booths that ring its two trading floors. By merging its upstairs desk with its floor operation, the firm hopes to eliminate any miscommunications between the two groups as well, as with its buyside customers.

"If you're not standing next to the guy, sometimes there is a breakdown in communication that will prevent you from doing what's best for your customer," said Keith Bliss, Cuttone's director of sales and marketing. "Putting our two main offices into the same location will enhance that communication."

The problem, Cuttone execs explain, is that a piece of information that emanates from the floor can pass through too many hands on its way to a buyside trader or portfolio manager. Along the way, the information runs the risk of being garbled.

"Somebody goes out to speak to the specialist and gets some information," said Bernie McSherry, Cuttone's senior vice president for strategic initiatives, "and they call it back to the booth. And the booth calls the desk. And the desk calls the trader. So by the time it reaches the portfolio manager, five people have touched it."

In May 2008, Cuttone hired veteran trading executive Richard Christ chiefly to manage and improve the flow of trade information between the floor and Cuttone's upstairs desk.

McSherry notes that such communication problems are not just limited to Cuttone, but affect all firms, including the brokerage where he spent most of his career, Prudential Securities.

As Traders Magazine first reported in July, NYSE Euronext, which operates the New York Stock Exchange, plans to demolish all of the standard booths in the Main Room to make way for new trading "pods."

The project will cost $5 million and take 18 months, ending sometime in the spring of 2011. Behind the renovation is a desire to bring more traders to the floor by creating a more attractive and efficient working environment.

That, the exchange hopes, will engender more trading. It should also make for a more attractive backdrop for media reports, which help cement the NYSE's brand in the mind of the public (see photo page 8).

Today, Cuttone has 23 people in its booth and plans to move another 10 down from its upstairs desk when the renovation is complete.