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October 3, 2011

Word For Word

By John D'Antona Jr.

Doreen Mogavero-founder, president and chief executive of New York Stock Exchange floor broker Mogavero, Lee & Co.-spoke with Traders Magazine recently about August's trading volume and volatility, what the buyside wants in a broker and how new regulations have affected her firm.


>> On the recent volatility that began in August

I expect the volatility and volume to remain for a while. However, I think the volatility might not be as high or the swings as large going forward as they were during early August. The bottom line is that volatility will continue until the investing public is more convinced the U.S. is on the road to economic recovery.


>> On fragmentation and its remedy

It would be preferable if we were to consolidate volume to a few highly competitive venues. We would then get more accurate pricing, leading to less volatility under normal circumstances. We'd also have greater certainty of execution, better chances of block transactions and faster executions, while still having enough venues to foster competition. We need to make internalized volume accessible to everyone. That volume is a big portion of business that has been taken out of the public marketplace.


>> On business development and client servicing as a minority broker

Being a woman-owned business has been a foot in the door in some instances and with some clients. But the reality is that we retain very little business from our status. The minority-owned-broker space has gotten crowded. As a firm, we have to be very good at what we do and very competitive to get and maintain business. While the minority status is definitely advantageous for us to get in to see a client for the first time, it does not guarantee us any order flow or business.


>> On regulation and small firms

The overall regulatory environment has become very complex. And while a lot of the new regulations needed to be put into place to keep the marketplace fair and investors safe, it has been more of a burden for smaller firms like mine. While larger firms have larger staffs that can focus more on regulations, for a smaller firm like ours, it is a larger portion of our operating costs. I want regulation to be efficient. I think regulators should consider tiering the process to appropriately fit a firm's size.


>> On floor brokers and buyside clients

While we attempt to trade on the floor as much as we can, we do go off-floor when we have to in order to get the best price. I've also seen the buyside moving back toward looking to the floor broker as a source of intelligence and information. The buyside is looking more and more for statistical information, such as price points, which may provide support or resistance. If you can couple correct price points with information regarding where the largest supply of liquidity at those points lies, it is a home run for the client.


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