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November 10, 2009

Beyond the Bulge

By Michael Scotti, Editorial Director

Mid-tier firms are often thought of as high-touch destinations for institutional orders. But that reputation is changing, as many have expanded into providing electronic trading services. This month's cover story, written by reporter James Ramage, showcases how mid-tier firms--don't call us regional firms any more, they will tell you--have come of age. These firms still trade small- and mid-cap stocks with the best of them, but they have stepped up their algorithmic and program trading services. In fact, some are national players who have gone global, opening offices overseas.

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So what happened? "We need to be able to continue to evolve with how the buyside is changing the way they pay people," Piper Jaffray's James Fehrenbach told us. "We do that by adding products, capabilities and the right people."

Indeed, mid-tier firms with good research products feared losing trading desk business to client commission arrangements, or CCAs. As the story discusses, the more ways the buyside can pay for research and other services, the easier it is for these firms to continue to get paid via trades.

One of the trading executives in our cover story also spoke last month at the Security Traders Association's Annual Conference in Scottsdale, Ariz. Robert W. Baird's Dan Renouard told attendees at the STA conference that the great migration of sales traders from bulge-bracket firms to independent shops--both with and without research--has ended. You can read more about this panel in our Inside Trading section. But Renouard also noted that firms had "mixed success" with the former bulge employees.

This was one of several stories that Traders Magazine covered from the STA event. Hats off to STA for putting on another first-class conference. Based on the program and our news coverage, it is safe to say that the panels were timely and informative. But no surprise there: STA has been doing solid work on the content side for more than a decade. Next year the STA will move away from a resort location to Washington, D.C.

I'm also happy to report that Traders Magazine Live drew its largest attendance ever in its fourth year. Our one-day conference in September--After the Crisis: An Examination of Brokerage, High Frequency Trading and Liquidity--drew 190 attendees. I often hear that there are too many conferences. Yet, lots of people still attend. I think our success in conferences is that we take the same approach that we do in the magazine: Content is king. If you get knowledgeable speakers on important topics and have provocative moderators who push the panelists to open up, the rest is easy. Enjoy the issue and Happy Thanksgiving.

 

Michael Scotti

Editorial Director

 

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