Electronic vs. Floor Based Trading

183 Pages·2005·9.36 MB·English

by  Robert A. Schwartz

Electronic vs. Floor Based Trading
Zicklin School of Business Financial Markets
Conference Series Baruch College, CUNY
Robert A. Schwartz, Editor
Baruch College/CUNY
Zicklin School of Business
New York, NY, USA
Other books in the series:
Schwartz, Robert A., Byrne, John A., Colaninno, Antoinette:
A Trading Desk View of Market Quality
Schwartz, Robert A., Byrne, John A., Colaninno, Antoinette:
Call Auction Trading: New Answers to Old Questions
Schwartz, Robert A., Byrne, John A., Colaninno, Antoinette:
Regulation of U.S. Equity Markets
Schwartz, Robert A., Byrne, John A., Colaninno, Antoinette:
Coping With Institutional Order Flow
Electronic vs. Floor Based Trading
edited by
Robert A. Schwartz
Zicklin School of Business, Baruch College, CUNY
John Aidan Byrne
Traders Magazine
Antoinette Colaninno
Zicklin School of Business, Baruch College, CUNY
^ Spri
ringer
Library of Congress Control Number: 2005935084
ISBN:10: 0-387-29909-2 e-ISBN-10: 0-387-29910-6
ISBN-13: 978-0387-29909-9 e-ISBN-13: 978-0387-29910-5
Printed on acid-free paper.
© 2006 Springer Science+Business Media, Inc.
All rights reserved. This work may not be translated or copied in whole or in part without
the written permission of the publisher (Springer Science+Business Media, Inc., 233 Spring
Street, New York, NY 10013, USA), except for brief excerpts in connection with reviews or
scholarly analysis. Use in connection with any form of information storage and retrieval,
electronic adaptation, computer software, or by similar or dissimilar methodology now
known or hereafter developed is forbidden.
The use in this publication of trade names, trademarks, service marks and similar terms,
even if they are not identified as such, is not to be taken as an expression of opinion as to
whether or not they are subject to proprietary rights.
Printed in the United States of America.
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Contents
List of Participants vii
Conference Sponsors xi
Preface xiii
Chapter 1: Getting the Trades Made 1
Chapter 2: Increasing Returns by Decreasing Trading Costs 17
Chapter 3: Operations of a Floor Broker 27
Chapter 4: Achieving Best Execution Through Market Structure
Development 49
Chapter 5: Electronic Trading 67
Chapter 6: Hybrid Markets 89
Chapter 7: Electronic & Floor-Based Trading: The Nyse Hybrid
Market 111
Chapter 8: The Economic Value of a Trading Floor: Evidence from the
American Stock Exchange 121
Participant Biographies 153
Index 173
List of Participants
Brooke Allen* President MANE Fund Management, Inc.
* At the time of the conference, Mr. Allen was Head, Statistical Arbitrage at
Maple Securities.
Matthew Andresen*
* At the time of the conference, Mr. Andresen was on the Board of Directors of
Lava Trading.
James Angel Associate Professor Georgetown University
of Finance
Theodore Aronson Founder Aronson+Johnson+Ortiz
Eric Barret Director, Global CIBC World Markets Corp.
Electronic Trading
George Bodine Director of Trading General Motors Investment
Management
Michael Buck Principal The Vanguard Group
Matthew Celebuski Managing Director JP Morgan Securities Inc.
Christopher Executive Vice The NASDAQ Stock Market
Concannon President,
Transaction
Services
Paul Davis Managing Director TIAA-CREF Investment
Management
Thomas Doyle Institutional Sales Nutmeg Securities
David Dusenbury Managing Director Dionis Capital
Vlll List of Participants
Alfred Eskandar Director of Liquidnet, Inc.
Corporate Strategy
Robert Fagenson President Fagenson & Company
Reto Francioni President and SWX Swiss Exchange
Chairman
WilHam Freund* Emeritus Professor Pace University
of Economics
*At the time of the conference, Professor Freund was Director of the WilHam
C. Freund Center for the Study of Securities Markets.
Adena Friedman Executive Vice The NASDAQ Stock Market
President of
Corporate Strategy
and Data Products
Robert Gasser CEO, NYFIX NYFIX Millennium
Millennium
Allan Grody President and COO Financial Intergroup
Puneet Handa Associate Professor University of Iowa
William Harts Banc of America Securities
Christopher Heckman Managing Director Investment Technology Group,
Inc.
Arthur Hogan Chief Market Jefferies & Company
Analyst
Catherine Kinney President & Co- New York Stock Exchange
Chief Operating
Officer
Richard Korhammer CEO and co- Lava Trading Inc.
Founder
Michael LaBranche Chairman, Chief LaBranche & Co., Inc.
Executive Officer
and President
Robert McCooey President & Chief The Griswold Company, Inc.
Executive Officer
Mary McDermott- Senior Vice Franklin Portfolio Associates
Holland President
Nina Mehta Reporter Traders Magazine
Doreen Mogavero President & Chief Mogavero, Lee & Company
Executive Officer
List of Participants IX
Edward Nicoll Chief Executive Instinct Group Inc.
Officer
Wilham O'Brien* Senior Vice The NASDAQ Stock Market,
President, Market Inc.
Data Distribution
* At the time of the conference, Mr. O'Brien was COO at Brut, LLC.
Michael Pagano Assistant Professor Villanova University
Brett Redfeam* Senior Managing Bear, Steams & Co., Inc.
Director
* At the time of the conference, Brett Redfeam was Senior Vice President at
the American Stock Exchange.
Richard Rosenblatt Founder, President Rosenblatt Securities
and CEO
James Ross* CEO MatchPoint Trading Inc.
* At the time of the conference, Mr. Ross was Managing Director at Burlington
Capital Markets.
Craig Rothfeld COO W.J. Bonfanti, Inc.
Lanny Schwartz Executive Vice Philadelphia Stock Exchange
President &
General Counsel
Robert Schwartz Marvin M. Speiser Zicklin School of Business,
Professor of Baruch College
Finance
Jamie Selway Managing Director White Cap Trading
Robert Shapiro Director of Trading Iridian Asset Management
Michael Simon Senior Vice International Securities
President & Exchange
General Counsel
Benn Steil Director of Council on Foreign Relations
International
Economics
Wayne Wagner Co-Founder & Plexus Group
Chairman
Avner Wolf Chairman, Zicklin School of Business,
Economics & Baruch College
Finance
Department and
List of Participants
Director,
International
Programs
Robert Wood Distinguished University of Memphis
Professor of
Finance
Conference Sponsors
American Stock Exchange
Archipelago Exchange
Bernard L. Madoff Investment Securities
Instinct Group Inc.
International Securities Exchange
Liquidnet, Inc.
NASDAQ Stock Market
New York Stock Exchange
NYFIX Millennium
Philadelphia Stock Exchange
Plexus Group
Security Traders Association
SWX Swiss Exchange