While writing a story for this issue, I was reminded of an old Wall Street axiom. There are two types of people on Wall Street, a veteran near retirement once told me. “There’s the boss and the hoss,” he said. It was something his father used to pound into his young head many years ago on the floor of the American Stock Exchange. The “boss” is the person with the order, and the “hoss” is the person without an order who needs one.
Today, it’s still good having an order in hand-or in your dark book or ECN or DMA product or algorithm. The technology is different, but having the order still reigns. And that’s what makes many scratch their heads over the number of new dark books and crossing engines still coming to market.
After all, there’s only so much liquidity. Still, new entrants continue to emerge: BIDS, the broker utility, is ready to roll; Pulse Trading launched BlockCross; and longtime electronic trading pro Dave Mortimer expects to launch not one but two ATSs in the fall, which he thinks will offer creative ways to find size in equities and options. Other systems will certainly follow.
In the end, systems’ success will turn on either features or price, or possibly both. But price without liquidity is meaningless. Like that veteran used to say, “It’s better to be the boss than the hoss.”
In this issue, you’ll also see our cover story reviewing the latest advances in algorithmic trading. Algos are gradually getting-and warranting-more order flow. Algos are becoming more sophisticated and can react to changes in market conditions and liquidity. As they become more adaptive and dynamic, some are using them for less-liquid stocks. Buyside traders are also customizing these algos to suit their needs-and to get the algos to trade the way they want the algos to trade.
You’ll also notice some changes this month that should make Traders Magazine more reader-friendly. The Fast Tracks section that used to run along the left-hand column in Industry Watch now has its own section, called “On the Move.” Also, Industry Watch and At Deadline have been rolled into a longer section renamed “Inside Trading.” This change opens up the section for more information. And Washington Watch has been renamed “Rules and Regs.” Same reporters, same solid reporting. Nothing has changed except the look, which I hope adds to your reading experience. Enjoy the issue.