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January 21, 2010

Time Stamped

By Michael Scotti, Editorial Director

After 10 years of research, my friend James Fisher recently published a fascinating book about the New York waterfront. His gritty chronicle is entitled "On the Irish Waterfront: The Crusader, the Movie and the Soul of the Port of New York." The book offers an in-depth historical perspective--with a heaping helping of politics, unions, religion and corruption--of the Academy Award-winning movie "On the Waterfront," featuring Marlon Brando.

Michael Scotti

Reading the book, I thought about how technology had changed the business of loading and unloading cargo--it parallels what happened to trading during the last decade. It is safe to say what containerization of cargo did to employment for longshoremen, electronic trading did for equity traders. We see it every day: more trading volume, fewer people.

Some of the longshoremen in Jim's book could easily have had sons who might have found their way into the securities business, trading over-the-counter stocks--or maybe on the floor of one of the exchanges. One generation could have been trading Nasdaq stocks in Jersey City, overlooking the harbor, not far from where their fathers once earned their daily bread after the "shape-up" each morning.

Today, there are fewer traders buying and selling stocks with four- and five-letter symbols than, say, a decade or so ago. That was Nasdaq, which, back in the halcyon 1990s, had the slogan "The Stock Market for the Next Hundred Years." Much has changed since Nasdaq was a dealer market focused solely on equities. In fact, it's a good thing Nasdaq has strayed from its equities roots and diversified.

In this month's cover story, executive editor Peter Chapman outlines Nasdaq's new mix of businesses and its challenges. After acquiring Sweden's OM and the Philadelphia Stock Exchange for its options business in 2008, Nasdaq has indeed gone in new directions. Chapman writes: "Today Nasdaq takes in more money from domestic options trading than it does from domestic stock trading. It takes in more money from European cash equities than from U.S. cash equities. And it takes in more money from co-location and other access services than anything else."

We also have a story on the trading tax Congress is considering. Interestingly, it was a Big Apple tax on trades that put Jersey City on the map as a destination for New York brokerage houses. Firms like Mayer & Schweitzer and Herzog Heine Geduld are gone from the trading lexicon. So, too, are the old Chelsea Piers across the Hudson. Things change.


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