It's an old saw of the securities business: Traders come and traders go. But for traders lately, it has been more the latter than the former, and we're not even in a bear market.
"It's no secret there are fewer traders today," says Stephen Kay, the new president of the Security Traders Association of New York (STANY). Kay is profiled in the cover story of this issue.
What happens to STANY, the biggest chapter of the Security Traders Association (STA), is vital. During the bear market of 2000-2002, STANY was hemorrhaging members and set up a job referral service to help people who wanted to continue in the business. STANY's efforts were closely watched, and with good reason.
STANY is to the STA what India was to the British Empire. It is its barometer. When India cut loose, people stopped singing "Rule Britannia." Anything dramatic that happens to STANY will be felt by STA, and, for that matter, the entire trading industry.
The interesting thing about bellwether STANY is, while the raw membership numbers have remained stable over the last few years, the kind of people who belong has changed (fewer traders, more vendors, more compliance pros-which tells you something about U.S capital markets).
Why are many traders thinking about enhancing their skill sets and retooling themselves these days? Kay, the first Knight Trading bigwig to take the STANY helm, offers some interesting answers. One is as obvious as my keyboard: the computer, which can often trade faster and sometimes better than the average flesh-and-blood trader.
But Kay also has some suggestions about how traders can tough it out in a period of intense competition here and abroad. And foreign competition there is aplenty.
Our issue also taps the expertise of a key Capitol Hill lawmaker, Rep. Vito Fossella, to understand why trading is going abroad. Our capital markets, Fossella warns in a signed piece, are losing competitive advantages. They are becoming overregulated.
"Gone are the days when capital would blindly flow to Wall Street," Fossella writes in a fascinating op-ed that should lead traders and their bosses to contact their lawmakers.
Given the complexities of equity trading today, we wanted to shed some additional light on the industry. So we also canvassed industry consultants in a Q&A to discuss some of the pressing issues traders now face and what they can expect on the horizon.