Officials at the National Association of Securities Dealers recently applauded Nasdaq traders for their improved compliance practices. Late trade reporting had declined by 13 percent in a nearly two-year period beginning August 1996, and Nasdaq traders were missing only half of one percent of all SelectNet liability orders.

Interestingly, the NASD largely attributes this turnaround to its Trading and Market Making Surveillance Examinations, or TAMMS exams.

TAMMS Evolution

TAMMS exams were initiated by the NASD in 1996, shortly after the Securities and Exchange Commission issued its Section 21(a) Report, which criticized the NASD for failing to police market makers.

In 1997, the NASD's Market Regulation unit conducted TAMMS exams on 110 of the largest over-the-counter market makers, collectively covering more than 90 percent of Nasdaq and the OTC markets. The staff found patterns of confused reporting practices, failed best executions and deficient supervisory practices.

The NASD imposed sanctions and collected significant fines. Compliance consciousness was raised, and the news on the Street was that the NASD was taking no prisoners.

This year, buoyed by its earlier successes, the NASD has expanded TAMMS exams for all market makers, from the smallest to the largest. NASD Market Regulation will continue to examine the largest market makers. District offices, under the direction of NASD Market Regulation, will perform all other TAMMS exams, concurrent with routine examination schedules.

TAMMS Focus

TAMMS exams are essentially audits of market-making practices and activities. They are intensive, high-powered and controlled by NASD Market Regulation. By contrast, less comprehensive, routine examinations are performed at the NASD district levels, covering general brokerage activities.

TAMMS exams touch upon just about every significant trading and order-handling rule.

Key areas are:

* Automated Confirmation Transaction reporting, or ACT, at the heart of NASD surveillance. Topics include the accuracy of reporting and the use of the .SLD modifier for late trades.

* Customer order handling in the areas of best execution, timely execution of limit orders, auto-routing and execution systems.

* Firm-quote obligations. Topics include backing away, failure to display customer limit orders and orders broadcast on SelectNet.

* 21(a) Report issues such as pricing and size conventions.

* Confirmation of transactions, including full disclosure in compliance with SEC Rule 10b 10.

* Written supervisory procedures and evidence of supervisory reviews.

* Books and records, including missing or inaccurate trading records.

TAMMS Process

TAMMS exams typically start with an announcement letter and end with a letter of sanction. In between, TAMMS examiners are likely to spend two weeks in the field and several months in their home offices during the examinations.

They review hundreds of market-making and customer transactions, and frequently expand their testing, sometimes to levels that border on harassment. Nasdaq trading and market data are also reviewed extensively. Significantly, very little time is spent with the trading desk and key firm personnel.

The examination phase concludes with an exit interview that clearly reflects the NASD's desire to reject compromise and embrace strict interpretations of rules. The Exit Conference Summary Form, with accompanying exhibits, outlines every aspect of the TAMMS exam, and can exceed 20 pages.

Each Nasdaq market maker then has an opportunity to respond. The challenge is to demonstrate that trading-desk activities, as a whole, do not constitute a pattern of rule violations. The NASD has, at least on record, promised to concentrate more on patterns of sanctionable events and less on individual or isolated violations.

To avoid sanctions, market makers must chip away at each and every apparent violation cited by the NASD. Many of the NASD's findings are questionable at best, and reflect the staff's relative inexperience with traders and the trading environment.

Indeed, head traders should help NASD staff understand that in many instances, violations did not occur, or that ambiguous NASD rules were applied. Alternatively, NASD staff should be informed that erroneous assertions of trading practices are being levelled against the desk.

For example, it would be worthwhile explaining to TAMMS examiners that a market maker that gave a print, minutes after receiving a SelectNet liability order, had not backed away from a firm quote.

NASD Assessment

Based on its assessment of the staff's initial findings and any market-maker responses, NASD Market Regulation may propose fines, sanctions and remedial actions. It is anticipated, although not certain, that the next range of sanctions will include individual traders, head traders and supervisory personnel.

Looking forward, Nasdaq market makers that have completed exit interviews should defend their traders and trade practices until the very end. Persistence may dramatically reduce fines and sanctions. Firms that have not yet been visited should prepare for TAMMS exams.

Head traders should emphasize to all Nasdaq traders and principals the importance of TAMMS exams. Traders should assist in the investigation of NASD findings, and, where applicable, be held accountable for errors that result in rule violations.

Howard L Haykin, CPA, is president of Compliance Solutions, a New York-based specialist in regulatory compliance for NASD broker dealers and SEC investment advisers.

A low-ranking official at the Securities and Exchange Commission recently fired off a public comment letter about the new trading system proposed by the National Association of Securities Dealers.

"The system," said the official rather inelegantly, "sucks."

The comment letter is one of more than hundreds of messages transmitted via e-mail to the SEC by letter writers who landed upon a home page used by the NASD to promote its integrated order-delivery and execution system.

The controversial system has been variously called NODES, Next Nasdaq, New Nasdaq and some other unprintable names. But the unprecedented use of the web by the NASD made name-calling purely academic.

Some investors and Internet surfers were taken aback. For a time, the site prevented a person from viewing other sites unless they e-mailed a comment letter on the new Nasdaq system to the SEC. The NASD was inundated with protests, and the home-page conundrum presumably prompted the uncharitable response from the low-ranking SEC official.

This was a bad start for the NASD's campaign to win support for the integrated order- delivery and execution system, or NODES. But it was a good, if not troubling, reminder of the subterranean depths the debate on NODES has sunk since the proposal was published on the Federal Register for public comment.

The confusing sounds of market makers, electronic communications networks (ECNs), public investors and other voices make this a battle for the history books.

The e-mails poured in from around the world, from as far away as Turkey, and as near as San Antonio, where retired widow Barbara J. Whiting said she was afraid to buy anything on Nasdaq anymore because "the prices are so volatile."

Some writers were enthusiastic about NODES, but not Mrs. Whiting.

"My broker says that this new system may make it even harder to determine [prices] because my order will be competing with brokers, market makers, institutional traders and other public customers," Whiting stated.

"He has told me some of his concerns about not being able to cancel an order for ten seconds, the anonymity of the contra-party and the ability of the market maker to not fill an order and say he's on the phone."

"Before SOES," added the quintessential little trader from way down South, "I wouldn't trade over-the-counter stocks. If this proposal goes through, I probably won't trade on Nasdaq again."

The wording for the NASD's brief message irritated most market makers and drew the attention of several skeptical ECNs. In summary, the NASD said it was asking the SEC for permission to make "exciting new changes to improve what is already the most popular marketplace for American individual investors."

At face value, the NASD's message was as convincing as a blond bombshell purring half-garbed atop a Cadillac Seville in a slick magazine advertisement. Some might view the NODES pitch as tantalizing. Sure, you'll subscribe.

The NASD said NODES would give matching limit orders the potential to be executed automatically without a spread, providing investors with tangible savings.

"These benefits increased visibility and lower transaction costs are just part of what Nasdaq wants to provide to the individual investor through it new system," the message continued.

Sure, how could you possibly resist? Some might, however. The NASD warned that "several groups are almost certain to be opposed to the Nasdaq-backed system."

Reuters Group PLC's Instinet, in its own public comment letter filed via conventional channels, said the NASD message was "hyper-promotional in nature and does not give the public a reasonable basis from which to offer informed comment. If the NASD member firms were to propose describing their services in such glowing terms on their web site, NASD Regulation would likely find such material in violation of applicable NASD regulations."

From the start, the proposal for a new trading system has been resisted by a large group of market makers, in part because a centerpiece of the proposal is a central, or consolidated limit-order book sponsored by the NASD.

Besides the fear of competition from its own self-funded, self-regulatory organization, market makers would likely have to fulfill several primary market-maker standards before they could provide institutional access to the book.

William Sulya, head of Nasdaq trading at St. Louis-based A.G. Edwards & Sons, welcomed most of the NASD proposal, but expressed several reservations.

For one thing, he xechoed a concern xxthat the xNASD's

voluntary limit-order book may become the de facto standard for best-execution obligations. "The apparent efficiency and fairness of the Nasdaq limit-order file would suggest that member firms would be satisfying best-execution obligations by routing orders to the proposed system," he said.

One of the few features market makers and other participants agree upon is the proposal to merge SOES and SelectNet into one system, thus eliminating the current problem of potential double liabilities on transactions.

The other problems raised by critics, thereafter, are numerous. For one thing, ECNs stepped up their attacks on the NASD's proposed system in the public comment letters.

Instinet said the proposed automatic-execution feature for smaller orders would force ECNs to begin assuming proprietary positions.

Bloomberg, which owns the ECN Bloomberg Tradebook, said the new system would likely put ECNs out of the automatic-execution system "because they could not provide automatic-executions to ECN participants without risking double or multiple executions via the new Nasdaq system."

Bloomberg illustrated, with an example, the dilemma ECNs could face:

Customer A places an order in an ECN to buy 1,000 shares of stock at $20 a share, which becomes the best bid in the ECN and is published in the new NASD limit-order book as the Nasdaq best bid.

Customer B, an ECN participant, enters a priced sell order into the ECN for 1,000 shares at $20 with the intention of hitting customer A's bid. Shortly thereafter, customer C enters an order into the NASD system through a dealer to hit customer A's bid.

Though it would appear Customer A is on the line for a double liability two trades, each 1,000 shares in size the ECN, in fact, would have to provide the 1,000 shares to satisfy Customer C's buy order, according to Bloomberg.

"That outcome would likely cause ECNs to exit the execution business because they would have no alternative but to send their participants' orders on an agency basis to Nasdaq. ECNs would thereby cease to be ECNs for orders of 1,000 shares or less within the SEC's definition in the order-execution rules. And then there would be only Nasdaq."

Instinet hinted at a conspiracy by the NASD, raising the possibility that only the top four or five Wall Street firms would be able to fulfill the NASD's proposed primary market-making standards. What's more, Instinet says the primary market-making standards as currently proposed are unworkable as institutions would be required to enter sponsorship arrangements on a security-by-security basis.

"Given that institutional money managers need the flexibility to trade Nasdaq securities at will, this would literally require dozens of sponsorship arrangements with Nasdaq market makers to insure that an institution could trade any Nasdaq security through the system at a moment's notice," Instinet stated.

A.G. Edwards' Sulya urged that the primary market-making standards not be a condition for sponsoring institutions, adding that A.G. Edwards feared this was the first step toward a bifurcated marketplace between institutional and retail investors.

The proposal engaged an Orwellian flight of fancy, according to another comment letter filed by day trader and Rutgers University finance professor David Whitcomb. He was referring to the firm-quote compliance facility, or the so-called phone-ahead button that market makers would press, giving them 17 seconds to take their quote out of the automatic-execution rotation.

"The worst part about the phone-ahead button is that it officially promotes false advertising. Firm quotes ought to be just that: firm and available," Whitcomb stated.

What about the little guy?

"Without meaningful competition," Instinet complained, "Investors would have less flexibility in determining how best to execute transactions in Nasdaq stocks, and be forced to accept the Nasdaq option."

Instinet thinks the little guy will be shortchanged because Nasdaq would be able to set commission rates independent of competitive pressure.

Long gone are the days when a market maker could just sit at a desk and trade.

Some fundamental market changes and a hard-nosed business sense have forced over-the-counter traders to reduce the odds of taking unprofitable positions. More than ever before, sell-side traders are researching the stocks they trade.

"Nowadays, I would say I spend 30 percent of my work day doing research," said Nicholas Ponzio, managing director of equity trading at Jersey City-based Hill, Thompson, Magid & Co. "I make more effective decisions the more I know about a company."

While 30 percent may be high for others, most traders are studying research to perform effectively.

"A well-informed trader is a better trader," said Bill Rothe, head of equity trading at BT Alex. Brown in Baltimore. "A trader not knowing a stock's name is a thing of the past."

Generally, sell-side traders are short-term buyers and sellers. Traders typically do not make investment decisions based on long-term goals. Market makers need liquidity, order flow and a spread to profit in position trading.

But with tighter spreads and profitability declining on equity-trading desks, traders need to make more informed decisions to maintain a competitive edge. Studying research is now of paramount importance.

"Trading has gotten so much more competitive and difficult," said Peter DaPuzzo, president of equity sales and trading at Cantor Fitzgerald in New York. "Traders need to know their stocks so much better."

A 40-year Wall Street veteran, DaPuzzo recalled that in the past, OTC traders just came onto the desk and traded. But over the last ten years, several factors have increased an equity trader's responsibilities.

The Past

In January 1997, the Securities and Exchange Commission imposed the order handling rules, requiring market makers to publicly expose customer limit orders and display the best prices quoted on private trading systems.

Last summer, the U.S. stock markets reduced their minimum quote increments for all stocks from eighths to sixteenths.

With the new rules and smaller increments, Nasdaq spreads narrowed by about 30 percent. Consequently, many Wall Street desks saw profitability decline.

"Trading isn't quite as profitable as it used to be," said Bill Allyn, head of block trading at Los Angeles-based Jefferies & Company. "I think a lot of desks have had to reexamine the way they do business to remain profitable."

To combat declining profitability, major Nasdaq broker dealers stopped making markets in certain stocks. Last September, for example, global giant Merrill Lynch & Co. dropped more than 300 Nasdaq stocks, or 40 percent of the Nasdaq stocks the firm traded. Another Wall Street giant, Bear, Stearns & Co., trimmed its Nasdaq roster from 550 to 450. And New York-based PaineWebber reduced its Nasdaq count from 735 to 525 in 1998.

With trading less profitable, desks are more closely following the stocks they trade, hoping to minimize the impact of trading on a net basis, largely a result of less profitable retail-sized order flow.

"The industry has changed so much in the last two years, I think trading desks had to really study their operations to keep the business profitable," Ponzio said.

To be sure, the continuing flows of money into stock mutual funds and pension plans have cushioned the financial burden of unprofitable trades. Even so, there is little room for error as institutional trades often involve large blocks of stocks and put a firm's capital at risk.

"You just can't risk getting caught on the wrong side of a transaction," DaPuzzo added.

The Present

When Ponzio wants information on a stock he trades, he first checks a Bloomberg terminal to review activity in the issue, and scrutinizes information that may impact its performance.

Generally, most traders use the many market-data tools available on every trading desk.

"We avail ourselves of everything we subscribe to," Rothe added. "We have a Bloomberg machine running, a Reuters link, and CNBC and CNN on the televisions all the time. If news breaks on a company or a stock, we want to know about it as soon as we can."

Most desks also subscribe to a number of industry newsletters and magazines. Robert Race, an equity trader at Winchester Investments in Overland Park, Kan., subscribes to a range of trade publications. He also heads to a public library a few nights a week to read about companies and the markets in various newspapers and magazines. Race estimates he does market research at least two hours every day.

"When I first got into the business, traders just came in the morning and traded," Race said. "But the business has absolutely changed, and you can't really get away with that anymore."

Aside from making a market in 25 stocks at Winchester, Race also manages his own portfolio of investments. "I need a feel for the stocks I want to trade, because my own capital is also at stake," he added.

Because Nasdaq does not have a physical trading floor, market makers still use telephones to work on executions with other traders, despite their desks' computer interfaces. Ben Marsh, managing director and head of OTC trading at Adams, Harkness & Hill in Boston, will ask other traders what they know about a stock.

"You have to use any bit of leverage you can to improve your performance," Marsh said.

Because Hill, Thompson, Magid makes markets mostly in non-Nasdaq OTC securities stocks listed on the OTC Bulletin Board and the pink sheets Ponzio can't always find the stocks he trades covered extensively in the media. He regularly invites a company's executives to his office for meetings. Ponzio also tries to visit companies close to his Jersey City office to look more closely at operations.

Most large market-making firms have highly-focused research departments staffed by analysts covering specific industry sectors. A trading desk will usually only make markets in stocks covered by its research department, relying on that research to stay informed on its stocks.

Most trading desks hold morning meetings to prepare the traders for that day's session. The meetings update the traders on information that may affect a specific stock or the market on that day.

During the day, if a stock begins performing irregularly, or a trader is presented with an unusual situation, the desk may call a research analyst to inquire about a stock.

"I'll ask an analyst during the day to fill me in on why a stock is moving the way it is," Marsh said. "He can usually tell me if it would be a mistake to take a short position, or if he thinks a stock has hit its bottom and won't drop further."

Many industry observers question whether research departments can truly provide objective analyses. These observers have criticized large firms for tailoring research to the goals of their investment-banking and sales departments.

"I don't want to get too opinionated about a stock I'm trading," Marsh said. "I encourage my traders to keep up on our research. But I also want them to keep a clear head, and to try not to be clouded by an analyst's opinion."

He stressed that his firm is a research-driven investment bank, dependent upon valuable, unbiased research to draw business. But he said that on Wall Street, objective research is not always easy to find.

Mark Kaicher, head trader at Buckingham Research Group, a New York-based firm making markets in 100 retail, cable and airline-industry stocks, similarly stressed a need for balanced research to keep decisions objective.

"With my retail stocks, I rely on our analysts, but I also go to a few stores now and again to check out how the products are packaged, and how they sell," Kaicher said. "I synthesize a variety of information to make the most objective decisions I can. The business is too competitive not to."

Kaicher also noted that trading has become a more technical profession in recent years. Before, firms would hire traders right out of high school, he said. Today, Kaicher added, many desks are hiring Ivy League graduates with master's degrees, and the learning curve in trading has risen as a result.

"It used to be more seat-of-the-pants trading," Kaicher said. "Now, you have to do your homework, and the business is so much more technical."

The Future

The move by market makers to more closely study the stocks they trade has been voluntary thus far. But new rules, proposed by the National Association of Securities Dealers and generally endorsed by the SEC, may leave market makers with no choice but to research non-Nasdaq OTC stocks.

At a meeting in February, the SEC approved a measure to increase the responsibilities of broker dealers quoting small, thinly-traded stocks.

At issue was a proposed requirement that broker dealers research and make available information on companies they quote on the pink sheets and the OTC Bulletin Board. At present, only the broker dealer initially quoting an OTC stock is required to review the issuer's financial data.

Also in February, the NASD released a list of companies that did not meet new Nasdaq listing standards. An industry source estimated that more than 2,000 companies would be forced to delist to the OTC Bulletin Board and the pink sheets in the wake of the new standards. With more OTC stocks not traded on Nasdaq, the OTC Bulletin Board and the pink sheets would see an increase in volume, experts say.

The OTC Bulletin Board and the pink sheets are generally perceived to harbor some questionably-listed companies. The OTC Bulletin Board is owned by the NASD, but is not held to the agency's listing standards. The pink sheets traded manually and named for the color of the sheets listing their price quotes are owned and operated by the New York-based National Quotation Bureau.

In May, the NASD approved its own set of rules requiring broker dealers to review and disclose financial information before recommending an OTC security to a potential investor. The proposal will also permit only those companies reporting current financial information to the SEC and banking and insurance regulators to be quoted on the OTC Bulletin Board.

At press time, the NASD was preparing to send the proposal to the SEC for approval.

Broker dealers contend that the proposed rules would place an unfair burden on small-cap market makers, with fraud liability bogging down trading desks.

"Market makers should not be held responsible for information because they trade OTC stocks," Ponzio said. "We don't mind doing research, but we shouldn't have all of the reporting responsibilities on our shoulders."

Ponzio's firm, Hill, Thompson, Magid, could be hit hard if the SEC approves the NASD proposal. And approval seems likely.

Tony Broy, Hill, Thompson, Magid's president, fears that many market makers would be forced to abandon the OTC market if the NASD rules are passed. "If those rules pass, every market maker would have to get out of the OTC Bulletin Board market," he said. "There would be a real bleed effect back to the NASD because a lot of stocks would be abandoned. And if stocks are traded away from a reputed exchange, fraud could be rampant."

Ponzio suggests the NASD and the SEC collaborate with the trading community to create a central location for company information.

"If someone, anyone, does due diligence on a stock, it should go to one central location to cut down on duplicating efforts," he said. "That way, investors, regulators and professionals would all know where to go to get company information, and responsibility wouldn't fall unfairly in one place."

The Constant

Meanwhile, market makers stress that skilled trading is still the most important responsibility of traders, despite the surge in research on the desk.

"Research definitely plays a bigger part in trading, and it plays a part in decision making," Rothe said. "But it only plays a part. You have to keep that in mind."

Marsh agrees. "I use research to my advantage, but I try not to be too smart with it," he said. "I'm not investing, and I have to remember that. I'm trading."

In 1986, Arthur Levitt Jr., then 55, made his motion-picture debut. He was cast as a Patriot in Sweet Liberty, a comedy about the making of a movie on the American Revolution, starring Alan Alda.

Alda played a dusty college professor whose career takes an unexpected turn when his book about the historic events is made into a Hollywood movie. Levitt's big moment came as an extra on location in a small collage town.

The American Patriots were standing in formation facing the British Redcoats in a big battle scene. With cameras rolling, the Redcoats opened fire, fatally wounding a Patriot. The Patriot collapsed, releasing a half-animal scream.

That was the living voice of Levitt, then the chairman of the American Stock Exchange, now the debonair public servant who this month starts his second term as chairman of the Securities and Exchange Commission.

By most accounts, Levitt is a lousy actor.

"He played the part [in Sweet Liberty] of somebody overacting," recalled Alda, a personal friend and tennis partner of Levitt's since their first meeting, years before on a summer vacation. "He was particularly well suited for the role."

By other accounts, Levitt is a first-rate politician.

"He's a builder, a deal maker and a very good manager," said former SEC Commissioner Richard Roberts, who served under Levitt before stepping down in August 1995.

Roberts, now an attorney at Reid & Priest in Washington, said Levitt had a teamwork approach, but made it clear who was the leader.

After an industry agreement was reached in 1994 to ban "pay-to-play" political contributions by large underwriters in exchange for lucrative municipal-bond business, Thomas A. Russo, chief legal officer at New York-based Lehman Brothers, remarked on Levitt's ability "to get everyone together in the same room and behind a proposal."

"He's a macro rather than a micro person," added Edward Fleischman, an SEC Commissioner from 1986 to 1992, just before Levitt took office, and now an attorney at Linklaters & Paines in New York. "He relies a lot on staff advice for the micro decisions. On the macro issues though, he's his own man."

"Someone like me, with views that were not considered traditional at the agency, not only got a fair hearing, but ultimately won the day in many cases," recalled Steven Wallman, an SEC Commissioner under Levitt from 1994 to 1997.

"If you wanted to have the opportunity to discuss something [with Levitt], he was always there," added Wallman, now a senior fellow at the Brookings Institution. "There was never, I don't want to talk about something' or I don't have time.' The time would always be made available."

Indeed, Levitt's time may break records. He will make history by becoming the longest-serving SEC chairman even before he completes his new five-year term, which expires on June 5, 2003. But how history will judge Levitt is a matter of some debate.

Protecting the investing public is a priority for Levitt, and investor groups generally applaud his efforts. Levitt waged war on shady dealings in the bond markets and indirectly confronted the Mafia on small-cap fraud.

At the same time, he remains seemingly unflappable as some market makers accuse him of conspiring to destroy the dealer market.

What to make of the conspiracy theory? "I've heard it very often," Fleischman said. "I just can't tell whether there's any element of truth in that theory."

"Arthur Levitt is a creature of floor-based stock exchanges," said Junius Peake, a professor of finance at the University of Northern Colorado and a former governor of the National Association of Securities Dealers. "He is more comfortable with that than with the idea of electronics."

Fleischman agrees. "Yes, he was identified with the auction markets. Beyond that, it's nothing you or I will ever really know," he said. "You could be very empathetic to the dealer market and still take the positions he has taken."

One Nasdaq trader maintains that Levitt's lack of career experience in the dealer market hinders his judgment. "I think it's simply a matter of not understanding the multiple-dealer system very well," the trader said, on condition of anonymity. "[Levitt] thinks in terms of the auction market. That's what he thinks about when he gets up every morning."

Indeed, Peake wonders if the barrage of new rules for equity trading under Levitt is necessary. "If all you're going to do is put your nose to the grindstone," Peake said, "you'll see nothing but sparks in front of your nose."

This much is not in dispute, however: under Levitt's watch, profitability on dealer desks has declined rapidly as a direct result of SEC-approved trading rules

"If you look at the gross margins among the wholesalers," said Tony Cecin, head Nasdaq trader at Piper Jaffray in Minneapolis, "you'll see that margins are down dramatically even with the higher volume of transactions done."

Notwithstanding the reported decline in overall market-making profitability, many industry experts stress that market making is still more lucrative today than several years ago. "There are more market makers than just a few years ago," said Roberts, "and market-maker profits last year were at an all-time high."

Still, suspicions of a strong, Levitt anti-dealer bias have been raised by traders since the SEC's massive shakeup of Nasdaq in 1997.

When an independent panel headed by Warren Rudman, a former U.S. senator, issued its final report in 1995, the NASD quickly adopted many of its recommendations. At stake, of course, were serious concerns about price-fixing among market makers, stirred in part by an academic study published by William Christie of Vanderbilt University and Paul Schultz of Ohio State University.

The committee's findings were not enough for Levitt, who launched a separate SEC probe that resulted in the order handling rules. Wallman strongly defended Levitt's record, saying that if the SEC did not act, "the Justice Department or a federal judge would have done so."

As Levitt begins his second term as SEC chairman, that fleeting image of Levitt sprawled on the battlefield in Sweet Liberty would probably get a standing ovation from some in the broker-dealer community.

"He's a very good man, but too loyal to his [ill-informed] advisers," said Meyer Berman, who heads up an equity-trading firm in Florida. "The one time I saw him [at an industry meeting], he had four people around him, like I was going to bite him or something."

Levitt was born and raised in a middle-class Brooklyn neighborhood, the only child of Dorothy and Arthur Levitt Sr. His mother was a schoolteacher, and his father rose through Democratic reform circles to become a major political figure in New York state.

The younger Levitt attended Brooklyn's prestigious Poly Prep School, where he demonstrated a flair for journalism as editor-in-chief of Polygon, the school newspaper. He graduated phi beta kappa in 1952 from Williams College in Massachusetts, majoring in English.

After two years in the U.S. Air Force followed by a stint as a drama critic for the Berkshire Eagle in Massachusetts, Levitt returned to New York and spent five years in marketing at Time Inc., before moving to Kansas City to sell cattle as a tax shelter for Oppenheimer Industries.

It was not exactly a conventional career path from Brooklyn to the canyons of Wall Street, but it suited Levitt just the same. By 1962, he brushed off the trail dust and began looking for work in the securities industry in New York.

Levitt landed at two-year-old brokerage firm Carter, Berlind & Weill. The career move was auspicious. In 1967, Levitt was named a partner and his name appeared atop the stationary in the reorganized firm of Cogan, Berlind, Weill & Levitt.

The upstart firm (dubbed Corned Beef With Lettuce by competitors as a play on its abbreviation, CBWL) soon embarked on an acquisition spree guided by legendary dealmaker and firm partner Sanford Weill, now chairman of financial giant Travelers Group. Cogan, Berlind, Weill & Levitt was the predecessor firm of Shearson Hayden Stone, one of Wall Street's top brokerages in the mid-1970s.

One of Levitt's roles during that heady period was to lure top-producing retail brokers to bolster his firm's prestige and bottom-line results. Levitt had a reputation as a decent man. It helped, of course, that his father was comptroller of New York state from 1955 to 1978, and known to some as Mr. Integrity.

A prudent custodian of the public's money, untouched in the public eye by scandal and well-liked among peers, the elder Levitt loomed large over the political and financial landscape. On Wall Street and in Albany, the name opened doors and inspired confidence in the younger Levitt. Along with a good name, Levitt inherited from his father a politician's instinct for dealing with people. Friends say Levitt has an extraordinary talent for remembering names and faces, and for making influential friendships. (NASD Chairman Frank Zarb is a longtime friend.)

At Cogan, Berlind, Weill & Levitt, he made introductions and brought people together, hosting lunches and dinners. This contributed enormously to the merger efforts of Weill, Levitt's acquaintances say. Most importantly, it helped Levitt engineer a career switch in 1977 when he was in his mid-40s, financially comfortable but still highly ambitious.

In 1977, Levitt decided to accept an offer to head the AMEX. Reversing the slow decline of the Curb Exchange turned out to be as tough as it looked. When Levitt left in 1989, the AMEX was still struggling to keep its listed companies on board, though daily volume had risen modestly from 4.9 million shares traded in 1978 to 9.9 million, boosted in part by the lucrative trading of index options.

Levitt demonstrated a populist style of leadership, said Kenneth Liebler, president of the AMEX under Levitt.

"In ten years, we never went to the board and got surprised," he said. "He was straightforward as could be, someone whose integrity and business acumen were beyond reproach."

As the AMEX chairman, Levitt was a visible public figure on Wall Street and in Washington. In 1981 he established the American Business Conference, a lobbying group for mid-sized companies, typically the kind listed on his exchange. As head of the conference, Levitt arranged hearings on Capitol Hill, set up conferences for chief executives and government officials, and forged a network of relationships among Washington's movers and shakers. While still at the AMEX in 1986, Levitt branched out in a direction harkening back to his early love of journalism.

Having made unsuccessful bids to buy the Daily News and Village Voice in New York, and The New Republic among others, he acquired Roll Call the off-beat Capitol Hill newspaper for nearly $500,000. Levitt assembled an experienced team, invested cash and pushed hard for new advertisement sales (with pitches to his Wall Street and corporate contacts).

What emerged was an entertaining mix of serious journalism (Roll Call broke the congressional check-bouncing scandal in 1992) personality profiles and offbeat stories, like pieces on politicians' pets (a favorite of Levitt's). Readership, revenues and visibility grew at a rapid pace. Curiously enough, Levitt's SEC office in Washington dismissed Traders Magazine's request for a personality interview with Levitt.

"Mr. Levitt is not big on these kinds of pieces," said Chris Ullman, director of public affairs at the SEC. Levitt, however, enjoyed publishing personality profiles of other public figures in Roll Call.

"It has been a passion, not just a cash-flow investment," Levitt said in 1993, the year he divested of his ownership stake in Roll Call. That labor of love produced an eye-popping return: The Economist paid a reported $15 million for Roll Call.

At home, Levitt played the doting father. He and his wife, Marilyn Blauner, who taught psychiatry at New York University's medical school before joining the faculty at George Washington University, have two children Laurie and Arthur III, the former president of the privately-owned Hard Rock Cafe

Levitt is an avid photographer, and the prints that line his office walls include the striking photo of Laurie that accompanied her 1986 engagement announcement in The New York Times. He is an even more avid outdoorsman, passionate about mountain-climbing, deep-water fishing and the annual back-to-nature jaunts arranged through the Colorado-based organization, Outward Bound.

His outdoor activities and constant networking have happily overlapped. Many of Wall Street's top honchos have spent long days sailing the Atlantic with Levitt on one of his large boats. Ever the macro guy, Levitt does not focus on the minutiae of navigation, fuel consumption and the like. Probably as a result, some seafarers experienced unforeseen excitement when he sank a 55-foot boat in Long Island Sound.

The fishing parties are mild adventures, however, compared to the Outward Bound expeditions. When he was at the AMEX, Levitt brought along floor traders, exchange directors and the chief executives of listed companies on the trips.

Later he included members of Congress and the Cabinet, educators, entrepreneurs, even journalists. Levitt was convinced that the outings improved communication and understanding among people of different backgrounds and opinions.

William S. Reed, a former vice president at Williams College, remembers a telephone call from Levitt one day.

"Will," Reed recalls Levitt telling him, "I'm going to give you an experience that will change your life. Will you join me and 15 friends on a ten-day Outward Bound trip? We're going to kayak down the Green River in Utah."

Reed went along, and during the trip saw a sharp contrast to Levitt's usual no-nonsense demeanor. "He was relaxed, playful and adventurous," Reed said in the Williams College alumni magazine. "He has a fear of heights, but nonetheless led a day of rock climbing and rappelling."

Levitt, according to Reed, is "the type of person who is comfortable with a certain amount of danger."

Sen. Larry Pressler (R-S.D.) accepted an invitation from Levitt to go horseback riding, and spent eight days in the saddle. "He never gives anyone any warning about how tough something is going to be," Pressler said.

Levitt's nomination as SEC chairman in the spring of 1993 was greeted with skepticism in some circles. After all, Levitt wasn't a certified Friend of Bill, and in the past had made donations to both Republicans and Democrats (though he was hardly the only well-heeled Wall Streeter to do so). In the summer of 1992, however, he co-chaired a Clinton dinner in New York, raising $3.5 million. That may have helped Levitt's bid for the top spot at the SEC. As to possible conflicts with his many ties to Wall Street, Treasury Secretary (and ex-Wall Streeter) Robert Rubin predicted at the time of Levitt's nomination, "I think Arthur won't have any problem in that respect."

Levitt was sworn in as the SEC's 25th chairman in June 1993, taking over for Richard C. Breedan, a Republican appointee. Levitt inherited a probing review of the U.S. markets. The staff report, Market 2000, came out later in 1993, and the new chairman accurately predicted it would have "something for everyone to dislike."

Levitt has a taste for the good life: first-class air travel, the best hotels, three-star restaurants. His penchant for creature comforts once upset a legislator who protested when Levitt flew first class rather than coach on SEC business. As it turned out, Levitt paid the excess amount over the commercial fare covered by the SEC travel budget.

Levitt butted heads with other legislators. Sen. Phil Gramm (R-Texas) hinted last October that he would consider withholding his support for Levitt's renomination after Levitt attacked Congress for "second-guessing" both the SEC and the Financial Accounting Standards Board (FASB) for proposing new derivative-disclosure requirements. "If anybody is intervening, tampering or being heavy-handed in this process, it's Arthur Levitt," Gramm snapped in October.

Moreover, Levitt replaced directors of the independent FASB which issues corporate-account rules with his own lieutenants, provoking furious criticism. "It was heavy-handed," Levitt later conceded, "and it was a mistake."

Levitt's efforts to turn the SEC into a self-funding agency, independent of congressional budgetmakers, was rebuked. Later, however, the SEC approved a measure extending 31(a) transaction fees on Nasdaq transactions, which indirectly funds the SEC's annual budget. Overall annual fees now levied by the SEC are well in excess of its $300 million operating budget.

To be sure, many market makers are unsettled by Levitt.

"Market makers would tell you off the record," said one trader, "that he makes a big show, but he doesn't have any respect for our opinions." Berman urged Levitt to spend more time considering proposals before passing rules that hurt market making. "The SEC has to start examining things before they do them," he said.

Perhaps Levitt is unconventional?

Soon after Levitt was nominated for the SEC chair in 1993, his movie friend Alda remarked how Levitt's unorthodox style of tennis said a lot about him. "He doesn't hold the racket the way other people do. He loves to win, and he makes the point. But you wouldn't have expected it."

As STRIKE, the name on the hottest new electronic communications network (ECN) simply suggests, Bear, Stearns & Co. is planning for war a price war.

STRIKE, the ECN sponsored by Bear Stearns, is going live this summer backed by some of the New York-based firm's Wall Street peers. And millions of dollars and potential profitability are at stake.

Arthur Pachecho, Bear Stearns' co-head of Nasdaq trading, and president and chief executive of the firm's affiliated STRIKE unit, said the new ECN is being marketed as an attractive alternative to Instinet and other ECNs.

Commissions

STRIKE's best weapon may be its commission schedule. Pachecho said STRIKE will charge customers "substantially" lower commissions for executions than its competition, but declined to elaborate.

Instinet, owned by London-based Reuters Group PLC, is the largest ECN approved by the Securities and Exchange Commission under terms of the order handling rules, and accounts for an estimated 20 percent of the average daily volume on Nasdaq, or more than 100 million shares.

Instinet's average commission charges are lower on heavy volume and generally amount to pennies or less on each share per trade executed.

STRIKE, which was approved by the SEC last January, thinks it will soon keep pace with Instinet's volume, thanks to a potential pool of lucrative order flow, including a network of more than 400 fully-disclosed Bear Stearns correspondent brokers that clear and execute business through the firm.

Bear Stearns' transaction volume is comparable to Instinet's, roughly 140,000 equity trades daily and about 12 percent of the business on the New York Stock Exchange.

Moreover, STRIKE is counting on order flow from some of the 15 equity participants and partners in the venture, including Wall Street giants Herzog, Heine, Geduld, Salomon Smith Barney, Donaldson, Lufkin & Jenrette, NationsBanc Montgomery Securities and Cantor Fitzgerald. (Sun Microsystems and NeoVision are also partners.)

"The nature of the owners means we can achieve significant critical mass," said Pachecho, the soft-spoken 34-year veteran who will vacate his seat on the desk this summer to concentrate fully on STRIKE.

In addition, STRIKE will be available through more than 60,000 Bridge terminals, a move that gives the soon-to-be-launched ECN a widespread reach.

Plans Hatched

Plans for STRIKE were first hatched in the wake of the order handling rules that made Nasdaq price-quote information more transparent.

Now a customer sending a better price on a stock to a market maker is assured that an order will be publicly exposed or executed by the market maker.

The market maker must either fill the customer's order, change its own quote to reflect the customer's superior bid or asked price, or transmit the customer's order to an ECN.

Bear Stearns' STRIKE plan was motivated by that ECN display option, and a calculation that it is more cost-effective to use its own ECN rather than a competitor's, which then collects the agency commission. An average-sized Nasdaq desk may pay Instinet and other ECNs several million dollars annually in commissions.

"There have been significant changes in the regulatory environment. Many changes are beneficial to the investors, of course, but at the same time, market making is much more expensive," Pacheco said.

"Costs are up and profits are down. One of the costs of doing business is the use of ECNs. The new [order handling] rules opened up competitive windows and prompted us to compete with the existing ECNs," he added.

The ultimate effect of having a new gorilla in the ECN business is not exactly clear. Some experts point out that volume on all ECNs has not increased appreciably since the order handling rules, raising the possibility that some ECNs will see a serious erosion in market share.

What's more, the National Association of Securities Dealers' proposed integrated order-delivery and execution system has raised more fears that business on ECNs will be crimped if the system is implemented.

Nevertheless, the ECN industry has some feisty competitors. Other ECNs launched after the rules took effect include Bloomberg's Tradebook and Automated Securities Clearance Corp.'s BRUT. Last October, the SEC and NASD approved an ECN that is operated by New York-based Spear, Leeds & Kellogg.

Newest Upstarts

Among the newest upstarts, BRUT, or Brass Utility, has also engaged in a price war of sorts. The system, which was recently approved by regulators, essentially "rewards" traders for using the ECN.

On a trader-to-trader transaction, for example, the trader entering the order into BRUT will be paid $1, while the broker taking liquidity from the system would be charged $4.

Thus, a 5,000-share transaction would cost a mere $3, compared to ten times the cost of doing the same transaction on alternative ECNs, according to a BRUT official.

BRUT is pitched as a customer service by Weehawken, N.J.-based Automated Securities Clearance, or as an accessory to order-management and routing software the company sells to market makers (that product handles a large proportion of Nasdaq business). But for Bear Stearns, ECNs are a means of remaining in business.

Bear Stearns, however, has an obvious advantage over other ECNs that do not have the luxury of a ready-made critical mass of order flow. "New ECNs really faces an uphill battle," one expert said. "Traders tend to think that time can be lost waiting for an execution if they send their orders to a smaller ECN."

The development costs for STRIKE, estimated by industry sources at $15 million to $20 million, were paid by Bear Stearns, Pachecho said.

"Even though Bear Stearns has borne the costs, STRIKE is not exclusively owned by the firm," Pacheco stressed.

Java Programming

STRIKE software is written in Java programming language, developed by Sun Microsystems. All applications or software written in Java can be deployed on any platform.

In other words, STRIKE will work equally on a PC, Macintosh or a UNIX computer. The only requirement is a Java-powered browser, such as the latest version of Netscape Navigator or Internet Explorer, both of which are available free from their respective web sites.

Traders can access STRIKE through their order-entry screens on Bridge terminals. Additionally, a fixed API (a type of application) enables companies to integrate the ECN into their trade-order blotter and backoffice software. Like other compliant ECNs under the order handling rules, STRIKE will be linked to Nasdaq via SelectNet.

Users will be able to access the system initially through a secure proprietary network developed by Bear Stearns, or through networks provided by Bridge, according to Bear Stearns marketing material.

Pachecho is confident. "[In most cases] traders do not have to invest in new software or hardware, or in expensive real estate, to access STRIKE," Pachecho said. "STRIKE is ready to roll."

Instinet: Owned by London's Reuters Group PLC, Instinet is one of the oldest and largest electronic communications network (ECNs). Founded in 1969, Instinet was acquired by Reuters in 1987, and now has offices in eight major financial centers worldwide. As a reigning champion, it is the target of every competing ECN, even though it has not seen any major impact on its business. The trading community complains that Instinet crashes often.

Fee: Up to 1.5 cents per share for brokers.

Market Share: 69 percent.

TradeBook: Owned by Bloomberg, the system is more than 15 months old. With 100,000 Bloomberg terminals in place, many thought it was the ultimate competitor for Instinet. However, it is still going through its early childhood. Still, a formidable competitor.

Fee: Up to 1.5 cents per share for brokers.

Market Share: Seven percent.

Island: Originally favored by electronic day-trading firms, it is one of the reasons Internet-based brokerage firm DatekOnline has faster access capability than its rivals. Not to be underrated.

Fee: $1 per trade execution.

Market Share: 20 percent.

Archipelago/Terra Nova: Used by options traders via handheld portable computers, though it is a minor player.

Fee: Up to three cents per share.

Market Share: Three percent.

Rating & Execution Dot Interface Book (RediBook): NYSE specialist firm Spear, Leeds & Kellogg's system, designed for institutions.

Fee: Not available.

Market Share: One percent.

Attain: Latest entry in the ECN market from electronic day-trading firm All-Tech Investment Group based in Montvale, N.J.

Fee: Up to 1.5 cents per share.

Market Share: Not available.

Coming Up Next

BRUT: The Brass Utility is developed by Automated Securities Clearance Corp., a Weehawken, N.J.-based company that makes Brass order-management and routing software, and Jersey City wholesaler Knight Securities (which has a minority interest).

Fee: Not available.

STRIKE: This ECN was developed by giant Bear, Stearns & Co. and a large consortium of Wall Street firms and technology companies. To debut later this summer, the system is seen as the next Goliath of the ECN world.

Fee: Not available.

Source: Traders Magazine research

The talent and resources of CDA/Spectrum and Technimetrics, two global leaders in providing institutional-ownership data to the financial markets, were recently combined to create an entirely new company to be called CDA/Spectrum. The new concern was created through the acquisition of Technimetrics by the Thomson Corp., the parent of CDA/Spectrum. In uniting the strengths of both organizations, the new CDA/Spectrum will achieve unrivaled data coverage and a delivery capability featuring an extensive array of products and services. The investor-relations advisory business of Technimetrics, also acquired by Thomson, will continue to be operated under the Technimetrics name.

CDA/Spectrum's principal product offerings to the financial-trading market include the Equity Gateway, an online service available via major market-data vendors. The recently released ShareWatch Gateway (see adjacent article) extends both the data coverage and functionality of the current Equity Gateway to meet the needs of today's financial-trading professionals. Additional CDA/Spectrum products include those developed using the Technimetrics ownership database. These products include Share/World via Unilink and Network Share/World, a client-server application. CDA/Spectrum plans to release another new product, Integrator, this summer. Integrator is expected to provide financial-trading institutions with an unbeatable combination of security-ownership data and information from Technimetrics' extensive database of institutions and contacts.

CDA/Spectrum is fast at work integrating the two ownership databases and organizations. As an initial step, the company is building a data-sharing capability. This phase of development will ensure that the sum total of data coverage is shared by all products by facilitating the transfer of information on securities, owners and holdings from one database to the other. All clients are expected to see improvements in data coverage and quality as a result of this initial effort. The second phase of development will involve the creation of an entirely new global-data repository to support both existing and future products.

With the combined resources and capabilities of two organizations, CDA/Spectrum is committed to raising the standard of its products and the services it provides to its clients. For information about how CDA/Spectrum can serve the needs of your organization both now and in the future, please contact CDA/Spectrum at (800) 232-6362.

CDA/Spectrum has announced the release of the next generation of its security-ownership solutions to financial-trading institutions. The new product provides users with an array of benefits previously unavailable in any product on the market. The ShareWatch Gateway will be powered by state-of-the-art, high-capacity servers configured to maximize system performance and stability. CDA/Spectrum understands the need of financial-trading professionals for instantaneous access to the kind of high-quality data that helps to drive decisions. The ShareWatch Gateway answers this need with superior performance at the desktop.

With the ShareWatch Gateway, CDA/Spectrum has succeeded in creating a product in tune with the current demands of the market. The benefits of the product include its integration of CDA/Spectrum's entire database of ownership information in a single application. Users of the new system will save an enormous amount of time using functionality that enables them to pinpoint sales and trading opportunities. For example, users can create their own client lists and match those lists to securities on their firm's Buy-Sell-Focus list. Accessing important names, titles and telephone numbers of contacts at institutional owners will be easier than ever before with the new Contacts Report. Users can even segment various reports based on filtering criteria such as geography, exchange or even type of institution.

The ShareWatch Gateway is available via major market-data vendors and a web browser. Browser access is provided over the Internet and through private links to the CDA/Spectrum network. For additional information about this powerful new sales and trading productivity tool, contact CDA/Spectrum at (800) 232-6362.

Some of the most important technological changes on equity-trading desks are only a few years old.

New systems and procedures, meanwhile, constantly enhance the productivity and performance of every trader.

Paperless trading, electronic order routing and a computer protocol dubbed the Financial Information Exchange, or FIX, are good examples.

Innovation is absolutely breathtaking, and the speed at which machines become obsolete is more stunning than ever before.

Wall Street is a hotbed of technology spending. The spending is of gargantuan proportions. And it shows no sign of slowing down.

Not convinced? Just consider the Securities Industry Association's Technology Management Conference and Exhibit at the New York Hilton, June 23 to June 25.

Visitors will discover vendors presenting products and services in areas such as wireless communications, workstation furniture, training, information storage and disaster recovery.

The conference is not short on variety, or of attendees with checkbooks stuffed into bulging briefcases.

As Pim Goodbody, the SIA's vice president of management services, wryly observed to Traders Magazine, "This is the place where industry pros can come to get answers to their most pressing technology questions."

Of hundreds of products exhibited, traders and trading-floor managers will be eagerly eyeing the next generation of trading systems, which promise to streamline operations and boost productivity.

OMR Systems Corp., based in Princeton, N.J., is showcasing the Trading Assistant, its front-to-back trade-processing engine that supports multiple trades from a single-entry screen.

The engine's processing capability includes trade validation, advice and payment processing and accounting usages.

The technology is compatible with the Financial Trading Network, which links individual trading-assistant systems on a trading floor or in seperate locations via messaging technology.

Midas-Kapiti International will highlight its Windows NT-based Front Office DBA trading system. The London-based company says its product is designed to eliminate the expense and confusion of running different applications for a series of specific tasks.

Consisting of independent but integrated components, Front Office DBA delivers real-time and historical market data and news, performs sophisticated pricing and market-risk calculations and automates deal capturing and position keeping all on a single workstation.

Front Office DBA offers traders access to real-time spreadsheets, graphic technical-analysis capabilities, free seating and support for occasional users. Other features include straight-through processing to the backoffice, market-risk management and the ability to expand support into various financial markets.

Trintech Systems, based in Stamford, CT. is showcasing a wide range of trading technologies. FloorLook is the company's electronic quote-routing system, connecting traders to the floor of the New York Stock Exchange.

Trintech's FloorReport supports the management of orders and executions between traders and exchange-floor operations, while its FIXTrader provides order management and routing for both buy-side and sell-side institutions.

Other Technologies

While trading systems take center stage, other technologies will certainly draw the attention of this year's crowd. Several companies are presenting new desktop display technologies.

Acton, Mass.-based Pixelvision is demonstrating its SmartGlas flat-panel display, which maximizes display space while minimizing eye strain.

Designed to replace bulky CRT monitors, SmartGlas resembles a thick sheet of glass and can be mounted on a desktop or wall.

The device allows traders to control more than 30 inches of high-resolution screen area from a keyboard or mouse. SmartGlas is designed to let traders view multiple applications simultaneously, and work collaboratively.

The display combines multiple-information tiles in an electronic mosaic, giving traders quick access to financial applications. The product also offers high brightness and wide-viewing angles, allowing traders to monitor applications and data whether they're standing or sitting from previously obstructed side angles.

Value Displays

Another SIA vendor will demonstrate how companies can derive more value from conventional displays. For the past 11 years, Colorgraphic Communications has been a leader in the design and manufacturing of multiple-display technologies for numerous vertical markets.

At the SIA show, the Atlanta-based company will introduce the Twin Tuna, a product that aims to combine innovations in multiple CRT screen-display technology with real-time video overlays. The plug-in PC card will allow traders to display their financial windows across two monitors. Users can also watch multiple television channels, cameras or satellite feeds in fully scalable windows.

The Twin Tuna occupies a single, full-sized PCI slot and ships with support for Windows 95 and NT 4.0. Software that provides full control of video and audio properties is included.

On the database side, Soliton Associates, based in Toronto, will exhibit TimeSquare, a database manager for financial-market data. TimeSquare integrates the acquisition, management, verification and dissemination of market data into a single product.

The software is SQL-based, making it accessible from any trading environment. Designed specifically for managing time series, TimeSquare aims to deliver fast, efficient updates.

As computing power grows almost exponentially, market-data storage and analytical tools are gaining in speed and sophistication. Inventure will use the SIA event to showcase its Ranger Enterprise Architecture, an innovative new solution for the distributed integration of data and analytics.

According to the New York-based firm, Ranger serves as an attractive alternative to data-warehouse technology, integrating disparate data and analytics, and delivering them globally to traders and other users over a corporate intranet. Users can view and manipulate all Ranger-linked data and analytics through familiar desktop applications, such as Excel, or through more specialized power-user tools developed by consultants and software specialists.

Ranger is optimized for the fast and accurate analysis of large, time-aware data sets, such as stock-price histories. The product solves problems faced by every company operating in the financial markets: seamless integration of multiple databases, irrespective of format or physical location, rapid data access, complete real-time and historic data integration, powerful analytics and sophisticated visualization tools. Ranger is available in both Windows NT and Sun computing environments.

Quotation services are also benefiting from advancing computer and communications technologies. CQG for Windows, for example, will present its real-time, graphically-enhanced quotation service at the SIA show.

The New York-based company's CQG for Windows is a decision-support system that's designed to meet the needs of a wide range of traders. CQG for Windows is a 32-bit application that operates under Windows 95 or Windows NT.

CQGNet provides the application through a user's internal network. Market databases available through CQG for Windows include 1,800 of the most actively traded U.S. equities.

All U.S. equities, their options and selected foreign equities will be available by year's end. CQG for Windows also provides more than 80 technical indicators, including Market Profile, Elliott Wave and Tom DeMark Indicators. CQG for Windows data may also be exported to Excel.

Integrating disparate and incompatible trading technologies into a single, cohesive system is a thematic pitch among vendors at this year's SIA conference.

In this area, Software Technologies Corp. of Monrovia, Calif. is marketing DataGate, a system that provides guaranteed message delivery, secure Internet access, mainframe connectivity and NT and UNIX support.

DataGate enables different information systems to exchange data in real time, regardless of the network, platform, operating system or application.

The product's point and click graphical-user interface allows companies to build a complete information infrastructure with intelligent routing and translation of data, creating a seamless enterprise architecture for disparate applications. DataGate also gives traders and other users access to virtually any system, thus preserving a company's investment in legacy hardware and software.

By linking different software and networking applications, and making all the translations, DataGate aims to provide complete integration across diverse platforms and geographies.

The New York Hilton is located at 1335 Avenue of the Americas, New York, N.Y. Telephone the SIA for more conference information at (212) 618-0577.

The AutEx Group is a Boston-based solutions developer for the automation of pre-trade processing and execution information for the global securities market. Its products are targeted toward buy-side and sell-side traders. Among the AutEx suite of products are:

* AutEX+, a global standard for electronic communication of pre-trade indications of interest and block-trading information for listed, Nasdaq and over-the-counter securities, American Depository Receipts and ordinary and convertible securities.

* AutEX+Web, a secure, Internet-delivered version of its equity trade-information service. AutEx+Web provides institutional users not on the front line of trading an additional liquidity tool without any investment in hardware or software.

* TradeRoute, a private, dedicated network that connects investment managers directly to more than 32 broker dealers and alternative sources of liquidity. Using a personal computer, investment managers access TradeRoute from TradeRoute+, vendor order-management systems and in-house management systems.

* MatchPoint, which allows AutEx+ users to directly access State Street Brokerage's Lattice trading system through their TradeRoute+ order-entry screens. The system allows orders to be electronically routed via TradeRoute's dedicated network to State Street's Lattice Match system, providing access to Lattice's internal book.

* BlockDATA/BlockONLINE, a global trade-information source for institutional-trade information, the reporting service of the AutEx+ network. BlockDATA, and its online service BlockONLINE, generates customized reports on trade activity as advertised over AutEx, focusing on specific securities, brokerage firms and industries.

Instinet Corporation, a subsidiary of London's Reuters Group PLC, provides agency brokerage services in global equities to securities professionals in more than 30 countries, delivered primarily through sophisticated computer technology.

Instinet provides its equity transactions and research services to a global base of institutional fund managers and plan sponsors, other broker dealers and exchange specialists. Founded in 1969, Instinet was acquired by Reuters in 1987, and now has offices in eight key financial centers worldwide.

Instinet is registered with the Securities and Exchange Commission as a broker dealer and is a member of the National Association of Securities Dealers, all U.S. regional exchanges, the American Stock Exchange, the Chicago Board Options Exchange, the European Options Exchange and stock exchanges in Frankfurt, Hong Kong, London, Paris, Stockholm, Toronto and Zurich.

As an agency broker, Instinet said it remains neutral in its transactions, neither buying nor selling for its own account. Its only business is providing brokerage services for the benefit of its customers through its application of computer and communications technology.

For Instinet's customers, the primary benefit of using Instinet as their broker is the ability to reduce trading or transaction costs, and in doing so, improve investment performance.

The Nasdaq Stock Market hardly needs an introduction. But its large capital investment in new technology is worth noting.

Employing elaborate computer and telecommunications networks, Nasdaq facilitates the trading and surveillance of more than 5,000 securities. Brokerage firms across the U.S. are able to compete freely via a floorless, screen-based trading environment to execute transactions quickly and efficiently.

Over the last 25 years, the world's first electronic stock market has propelled the securities industry into the 21st century, with its innovative market structure. The average daily share volume on Nasdaq has soared higher than any other stock market in the world. Now, more than half of all equity shares traded in the U.S. every day are traded on Nasdaq.

Nasdaq's web site (www.nasdaq.com), provides market participants a valuable world of trading data, trading services and Nasdaq news.