Under prodding by market makers, the National Association of Securities Dealers is proposing to push back its phase-in of a system designed to electronically capture more than two dozen trade details.

The first component of the Order Audit Trail System (OATS), the direct entry and capture of trade information, was originally to be implemented this August. Non-electronic procedures were to be covered starting Jan. 1, 1999, followed by all other orders on Jan. 31, 2000.

Under an amended proposal filed with the Securities and Exchange Commission, the NASD wants to push back the first phase to February 1999, the second phase to August 1999 and the final phase to July 31, 2000.

The original schedule was criticized by market makers because they said it strained their technology resources.

In addition, adopting the OATS requirements, mandated by the SEC, was making life difficult for traders coping with other major changes, such as the order handling rules.

SIA

As previously reported, the Securities Industry Association's OATS Ad Hoc Committee complained that more time was required to comply with the workload involving OATS.

"A technological undertaking of this kind requires more time [to program and to test]," stated the committee chairman, Bernard L. Madoff, in a letter to the SEC.

The SIA committee had warned that the original schedule put an unfair burden on small and medium-sized Nasdaq trading desks that were unlikely to have the order flow to run in-house audit-trail systems.

Their only option was to use service bureaus and their clearing firms, the committee stressed. Indeed, the real winners would be clearing firms that offer "one-stop shopping [for their correspondents]," the SIA committee maintained.

The SEC is expected to approve the NASD's revised OATS plan, according to industry sources.

NASD Regulation has come down firmly on member firms on Year 2000 compliance. The regulatory subsidiary of the National Association of Securities Dealers has demanded that members report on their progress in making their computer systems compliant.

Mary Shapiro, president of NASD Regulation, said in a prepared statement that it is essential that broker dealers' computer systems continue to operate successfully after Dec. 31, 1999.

"It is imperative that firms aggressively take on the Year 2000 challenge, and that the automated systems they rely on to meet their regulatory, market-participant and investor-protection obligations be Year 2000-compliant," she said.

NASD Regulation's request was announced in a so-called NASD Special Notice to Members. The notice stated that it is the responsibility of members to analyze the readiness of their own automated systems.

How can market makers remain competitive in a hostile trading environment?

They can capture the value of processing customer order flow and charge for the unique aspects of their liquidity services. A good place to start is with the quotation and last-sale information-value of order flow.

Historically, market makers relied exclusively on the bid-and-offer spread to cover the cost of all services they provided to retail brokers.

These services included leased communication lines to clients, computers and software, correspondent fees paid to brokers, publication of quotations, order execution and trade processing, inventory risk and compliance.

Times have changed, of course. The Securities and Exchange Commission-approved order handling rules have essentially eliminated the ability of market makers to capture the spread-revenue on limit orders.

These rules give priority preference to limit-order quotes over pre-existing market-maker quotes, requiring the inclusion of limit-order prices in the National Best Bid and Offer. Consequently, the rules have narrowed market-quoted spreads by about 25 percent.

Regulation, in effect, has forced an unbundling of market-maker revenues. Through a matrix of rules, the SEC is actually keeping market-maker spreads on market orders at a level not exceeding the cost of providing the liquidity services of a limit-order book. Unfortunately, these limit orders cover none of the market makers' regulatory costs.

In contrast, market-maker regulations, such as mandatory SOES and fixed minimum quote sizes, are still in place, forcing market makers to keep extra, costly liquidity services bundled with their quotations. A market-maker quotation is now worth more than an incoming customer limit-order quote, yet the market maker cannot provide these liquidity services exclusively to customers. A competitor, for instance, could hit the market-maker's bid via SOES.

Market makers initially responded to the order handling rules by reducing expenses, specifically eliminating cash payments to retail brokers for unprofitable limit-order flow. Of course, this shifted a significant part of the immediate negative revenue effects of the rules to retail brokers and their customers. Still, market makers are executing limit orders at a loss.

Now they must find new ways to remain competitive. Last-sale information-value of order flow is worth examining.

To begin with, National Market System (NMS) facilities have been allowed to evolve in a manner that requires information-generating enhancements such as last-sale reporting on Nasdaq stocks to increase participants' operating costs. The value of the information is captured by the self-regulatory organizations (SRO) through exclusive management of the central-information processor. Nasdaq is an example of an exclusive central-information processor.

The Chicago Stock Exchange (CHX), as an SRO participant in the unlisted trading plan for Nasdaq stocks, is able to share in the huge subscriber-fee revenues generated by the National Association of Securities Dealers from the sale of last-sale and quotation-price data. In 1996, NASD market-data and subscriber-fee revenues aggregated $222 million.

Market makers and electronic communications networks (ECN) should have as much interest as the CHX in capturing the market-data value of their order flow. After all, they are the producers of the quotation and last-sale information that is being sold.

Therefore, it would only be fair to reconfigure activities to capture an equivalent proportion of the market-data revenues on the same basis as the CHX. As I previously stated in Traders Magazine, the current arrangement for sharing market data subscriber-fee revenues among SROs (exchanges and the NASD) is unfair, placing market makers and ECNs that are not SROs at a competitive disadvantage. It discriminates against small-investor clients, who unlike institutional investors, are dependent upon the ability of retail brokers, market makers and ECNs to achieve the revenue and cost efficiencies derived from the aggregation of small orders into a large flow.

Such discrimination appears to violate the spirit of the NMS 1975 Amendments to the Securities Exchange Act of 1934. Congress was explicit regarding its intention that the SEC apply rigorous utility-type regulation to insure the competitive neutrality of the NMS facilities characterized by exclusive SRO processor control. Through regulatory oversight, the NMS plans have allowed the NASD to retain the market-maker share of subscriber-fee revenues for both Nasdaq and New York Stock Exchange-listed stocks.

Similarly, the discriminatory impacts of subscriber fees and sharing deficiencies on individual investors, investing directly, have been overlooked.

Clearly, the costs of the central processor need to be covered. But subscriber-fee revenues, not required for the receipt and redissemination of the information to vendors, should be apportioned among the generators of the information in relation to their contribution to the value of the information stream. A method is required for non-SRO trade-execution centers to capture their proportionate share of market-data revenues. For one thing, the SEC could require changes in NMS plans that enable non-SRO quotation and last-sale reporting centers to participate on the revenue-sharing side. For another, market makers could explore ways to route their quotation and last-sale information through an SRO that agrees to share revenues, or is set up to accomplish that objective.

Market makers and ECNs owe it to themselves and their clients to capture that value. With only 50 market makers and ECNs accounting for almost 95 percent of Nasdaq and third-market transactions, this should not be an insurmountable task.

Gene L. Finn served as chief economist for the SEC and the NASD. He is currently an outside director at Ameritrade Holding Corp. and Roundtable Partners.

Dealers will certainly be the big winners if Nasdaq's proposed limit-order facility is approved. They would regain priority over customer limit orders and establish a cheaper alternative to Instinet or Bloomberg Tradebook.

Institutional limit-order traders, however, would have a disincentive to use the system, and retail limit-order traders would find that many of their orders would go unfilled unless the market moves against them.

The limit-order facility, the centerpiece of a new integrated order-delivery and execution system, proposed and filed for approval with the Securities and Exchange Commission by the National Association of Securities Dealers, would create a central location where limit orders could be stored and prioritized by price and time. (The system was originally dubbed Next Nasdaq).

Like Instinet, the identity of the trader would not be revealed in the limit-order facility until the trade is executed. Institutions don't want to trade through dealers for fear of being front-run. On the other hand, dealers don't want their identities revealed until they have the chance to unwind positions they have taken.

At the moment, the main users of Instinet are Nasdaq dealers seeking anonymity they cannot obtain elsewhere. Last fall, another dealer market, the London Stock Exchange, instituted a limit-order facility. The evidence thus far indicates that the majority of the volume in that system is generated by dealers who have switched from other dealer-messaging systems.

The same should be more than true about the new Nasdaq facility. While dealers would find the new Nasdaq system a cheaper alternative to Instinet, institutions would probably remain on Instinet because of the Nasdaq system's live-quote rule.

That rule means that orders placed on the new system can't be canceled in the ten seconds following the order's entry. This would act as an effective deterrent to institutional usage of the system. (Note that market-makers' quotes on the current Nasdaq system are not subject to the ten-second rule.)

What about retail limit orders? Nasdaq is a fragmented market without system-wide priority rules. While a dealer cannot trade ahead of a customer limit order he or she holds, the dealer is free nonetheless to trade ahead of customer limit orders held by other dealers or electronic communications networks. Plans for the new Nasdaq facility call for price and time priority inside the facility. However, that is only envisaged for non-directed orders. The market practices of payment for order flow, internalization and preferencing would guarantee that little, if any, order flow would be non-directed. Therefore, the system-wide priority rules will rarely be invoked.

Market participants could direct orders to the new Nasdaq facility or to another dealer. In this case, dealers' best-execution obligations would require that they obtain the best price, not the first best price.

A dealer could direct his order to another dealer offering the same price as the new Nasdaq facility, and his customer would be no worse off than if the order was executed against limit orders in the new facility. Hence, given the practice of payment for order flow, there would be no incentive for market orders to be directed to Nasdaq's limit-order facility.

In contrast, the New York Stock Exchange and the American Stock Exchange provide sufficient incentives for a large amount of market orders to be directed to them for execution against their limit-order books.

Although brokers can direct market orders to one of the regional exchanges or to Nasdaq (in payment-for-order-flow or internalization arrangements), many do not direct orders this way. Price improvement is the reason the NYSE and the AMEX continue to control the lion's share of trading in their listed stocks.

Studies have shown that more than 25 percent of the orders sent to the NYSE execute inside the current quote. Brokers like to report price improvement to their customers, so they have an incentive to direct market orders to the national exchanges. This provides the flow of market orders necessary to make the NYSE and the AMEX limit-order books successful. (Regional exchanges provide some opportunity for price improvement, though a far greater opportunity exists on national exchanges).

Without system-wide time-priority rules and the chance for price improvement, there is no incentive to send Nasdaq market orders to the limit-order facility. And without the flow of market orders, Nasdaq retail limit-order traders quoting at the same price as dealers will see their orders go unexecuted. That is, unless the market moves against them, in which case dealers will move their quotes and limit-order traders will see their orders executed at the worst possible times.

This provides a disincentive for retail traders to submit limit orders. Without the flow of market orders to interact with, the proposed Nasdaq limit-order facility will fail.

At press time, Nasdaq announced an agreement in principal with OptiMark Technologies to allow access to OptiMark from Nasdaq on a commission basis. The preliminary plans are to allow Nasdaq's limit-order facility to take part in OptiMark matches.

Given the wide spreads on many Nasdaq stocks, it is highly probable that matches will typically occur inside the spread. Therefore, limit-order traders quoting at the same prices as dealers will be no better off under the agreement.

However, the agreement with OptiMark clearly shows that Nasdaq is beginning to realize the magnitude of revenues it can gain from commissions versus spreads. Nasdaq should consider system-wide priority rules for all trades. While the primary-priority rule should be based on price, the secondary rule does not have to be based on time.

For example, the secondary-priority rules on the Toronto Stock Exchange are designed so that each member with orders on the book is guaranteed at least a partial fill. An order exceeding the size of the first quote at a given price is shared among all quote participants on an equal-allocation basis, up to some level (2,000 shares). Any remaining amount is allocated on a prorata basis.

Nasdaq should remember the lesson it learned in 1983 when it fought hard to prevent contemporaneous trade reporting. Recall that then-NASD President Gordon Macklin met with the SEC six months after the NASD was forced to accept the rule for a small group of stocks, and asked that all of its stocks be subject to the rule.

It turns out that change was good for business, because volumes and profits increased after the rule change. I believe the same would be true if Nasdaq created a level playing field and allowed limit orders a chance to be executed.

Daniel G. Weaver is an associate finance professor at Baruch College in New York and an expert on market microstructure.

In a move to strengthen their global sales trading, New York's Arnhold and S. Bleichroeder named Stephen Tatz head trader of the department. Tatz, a former head South African trader at the firm, reports to Geoffrey Collier, head of equities at Bleichroeder.

Four additional traders joined the global sales staff at Bleichroeder, reporting to Tatz. Roger Simpson moved from GFI Group in New York, where he was an inter-dealer broker. Kent Penney was previously an institutional salesman at New York's Alexander, Wescott & Co. Abigail Williams joined the firm from Josephtal & Co. in New York. And Chris Kramer was internally transferred from the convertible-bond trade desk.

Merrill Lynch & Co. named Jeffrey Peek head of its asset-management unit in the wake of the firm's $5.3 billion merger with London's Mercury Asset Management Group. Peek will be responsible for coordinating Merrill's $275 billion worldwide asset management activities. Previoiusly co-head of investment banking at the financial giant, Peek will be based in New York.

Richmond-based Scott & Strinfellow promoted David B. Marino to senior vice president. He serves as head position trader and manager of Nasdaq trading at the firm. Marino, a 14-year industry veteran, has been with Scott & Stringfellow since 1989.

Elizabeth Wood was named a senior sales trader for the international institutional equity-sales and trading division of New York-based Cantor Fitzgerald & Co. Wood is responsible for executing orders on non-U.S. equity products for the firm's leading institutional clients. She closed out her own independent firm, Robinson Investment Group in New York, to join Cantor.

The National Association of Securities Dealers appointed Gregor S. Bailar chief information officer for the organization and its subsidiaries, NASD Regulation and Nasdaq. In his newly-created position, Bailar will oversee all aspects of information technology, reporting to NASD Chief Executive Frank Zarb, and Richard Ketchum, NASD chief operating officer. Bailar, formerly a managing director and vice president of advanced development for global corporate banking at New York-based Citicorp, will be based in Washington.

The NASD also promoted John M. Hickey to chief technical officer, responsible for technology operations at the NASD. Hickey will continue in his current responsibilities at Nasdaq as an executive vice president of technology services, responsible for the day-to-day operations of the Nasdaq stock market. Hickey is based in Washington.

Dean Bruskof joined Sharpe Securities in New York as a director of exchange services on the floor of the New York Stock Exchange. Bruskof previously served in the same capacity at the NYSE for Chicago-based Rodman & Renshaw.

Campbell & Co. named Bruce Cleland chief executive officer, to replace Keith Campbell, the firm's founder and principal. Campbell will continue as chairman.

Citicorp Securities Services appointed Michael Richter president, responsible for marketing, product management, sales and trading. Richter, previously with the firm's distribution and investment-products group, reports to Ashok Bhatia, chief executive and chairman of Citicorp.

The New York-based brokerage firm also named Dennis M. Sarf a senior vice president of business development and correspondent-clearing sales. Sarf joined Citicorp from New York-based accounting and consulting giant Coopers & Lybrand. He reports to Richter.

Wesley M. Oler, head of equity trading at Brown Brothers Harriman & Co. in New York, was promoted to senior manager at the firm. A 19-year veteran at Brown, Oler supervises the domestic and foreign institutional trading desks, as well as the listed brokerage operation and electronic-trading group. He also serves on Brown's brokerage-management committee.

New York-based Cantor Fitzgerald appointed Joseph Simon chief financial officer. Simon will direct all of the firm's global finance and treasury operations, supervising a staff of more than 250 financial specialists. He previously worked as an international controller at Cantor.

Everett M. Ehrlich, a former undersecretary of commerce during the Clinton administration, joined the Securities Industry Association as an economic consultant. Currently, Ehrlich heads his own Washington-based consulting firm, ESC Company, which he formed last year after leaving his adminsitration post. Replacing outgoing SIA economic consultnat Jeffrey Schaefer, Ehrlich will report directly to SIA President Marc E. Lackritz.

One of two New York Stock Exchange vice chairman, James Jacobson, will step down from their post in June and not seek reappointment. Jacobson served as a vice chairman from 1992 to 1993, and was elected to his second term in 1996. The NYSE board appoints the two vice chairman to serve two-year terms. Jacobson, head of a specialist firm Benjamin Jacobson & Sons on the Big Board floor, served on the NYSE board from 1987 to 1993.

ABN AMRO Chicago Corporation has changed its name to ABN AMRO Incorporated.

Separately, the Windy City-based firm named Timothy J. Leach president and chief executive of its U.S.-registered investment advisor, ABN AMRO Asset Management. Leach was previously president and chief investment officer at Qualivest Capital Management in Portland.

New York-based Dresdner Kleinwort Benson North America, the U.S. investment-banking arm of Dresdner Kleinwort Benson, named Linda Byus and Jim Falvey senior equities research analyst. Byus joined Dresdner from Toronto-based Nesbitt Burns, and will specialize in the electric-utility industry. She will be based in Chicago. Falvey, previously with recently merged Smith Barney, will work in the firm's Boston office as an integrated-oil analyst.

Dresdner also hired Mike Cody as a senior sales trader, and Lee Middlekauf as a senior salesman. The two will be based in the New York domestic equities group. Cody was previously wit NatWest Securities in New York. Middlecauf was formerly a salesman at Boston-based Tucker Anthony.

Global giant Merril Lynch appointed E. Stanley O'Neal its chief financial officer. O'Neal previously served as co-head of Merrill's corporate and institutional client group, which includes investment banking and securities trading worldwide. Based in New York, he succeeds Joseph T. Willett, who will become chief operating officer for Africa, Europe and the Middle East.

The Securities and Exchange Commission has proposed a regulatory initiative to curb small-cap fraud and increase the responsibilities of broker dealers quoting small, thinly-traded over-the-counter stocks.

In a similar push, the National Association of Securities Dealers will publish, at the end of this month, a list of companies no longer meeting new standards to list on Nasdaq.

At press time, the SEC declined to comment on the outcome of the agency's Feb. 10 meeting.

At issue was a proposed SEC requirement that all broker dealers research and make available information on companies they quote on the pink sheets and the OTC Bulletin Board. At the moment, only the broker dealer initially quoting the over-the-counter stock is required to review the issuer's financial data. Updates are not required.

The SEC initiative is part of a larger agency drive to cut down on stock fraud. The pink sheets and the OTC Bulletin Board are generally perceived by regulators to harbor some questionably-listed companies.

Indeed, the OTC Bulletin Board, although owned by the NASD, is not held to the regulatory agency's listing standards.

Still, the SEC rule change may encourage rather than discourage small-cap fraud, according to Cromwell Coulson, chairman of the National Quotation Bureau, owner and operator of the manually-traded pink sheets.

"This rule springs from good intentions, but it will have the wrong results," Coulson said. "The new rules may put the information obligation on the broker dealer, who is not controlling the source of information. That information is the responsibility of the listing company."

He added that if broker dealers back away from quoting small-cap stocks, the listings could move to a wholly unregulated marketplace, like the Internet. "That type of black-market trading could hurt investors terribly," Coulson warned.

Separately, the National Quotation Bureau last month announced it would automate the trading of their more than 2,700 listings, pending regulatory approval. Coulson said the new system would provide a real-time bulletin board of market-maker quotations and an electronic-negotiation and order-routing platform for subscribers. He hopes to have the pink sheets fully automated by year's end.

"We will be getting a lot more listings with these new Nasdaq requirements," Coulson said.

On Feb. 23, the NASD is expected to make public a list of companies that do not meet the new Nasdaq listing requirements, with a view of pushing these listings to the pink sheets or the OTC Bulletin Board.

Approved by the SEC last August, the changes include a requirement that all Nasdaq and Nasdaq SmallCap common and preferred stock have a minimum bid price of $1. If a Nasdaq stock dips below $1 for 30 days, the stock has 90 days to return to the $1 mark, where it must close above $1 for ten consecutive days. Failing that, the stock will be delisted. The NASD said this measure is a safeguard against market activity associated with low-priced securities namely stock fraud.

Most Nasdaq stocks will also be required to have two market makers, 400 round-lot shareholders, 750,000 shares in the public float, a market value of at least $5 million and $4 million in net tangible assets.

Additionally, the new rules state that each Nasdaq SmallCap listing must have 300 round-lot shareholders, 500,00 shares in the public float, a market value of at least $1 million and either $2 million in net tangible assets, a $35 million market capitalization or at least $500,000 in net annual income.

Coulson expects more than 2,000 Nasdaq issues to delist to the pink sheets or OTC Bulletin Board this year under the new requirements.

In one of the most-high profile turnovers of its kind in recent memory, several well-known equity-trading executives, at firms that include Donaldson, Lufkin & Jenrette and Cantor Fitzgerald, are leaving the business.

At DLJ, a Dec. 12 internal memo to all employees of the New York-based firm announced the retirement of Robert Antolini, head of equity trading at DLJ. Antolini, topping a Wall Street career spanning four decades, has been with DLJ since 1985.

The memo said Antolini was leaving the firm by month's end. Antolini was succeeded by Robert Padala, previously head of over-the-counter trading at DLJ.

Peter DaPuzzo, president of equity sales and trading at New York-based Cantor, said he intends to retire by year's end, confirming widely-circulated rumors. "I still love the business," said DaPuzzo, who is 57 and a 40-year Wall Street veteran. "But I feel like it's time to move on."

"There have been many changes in this industry recently, and I think Cantor needs fresh blood to keep up with the new rules and maintain strong a business," he added.

DaPuzzo, whose duties became more administrative in recent years, said he plans to set a formal retirement date in the fall. But he doesn't intend to completely abandon the business.

After his retirement, he plans to enter modified service at Cantor, serving as a consultant several days a week. "I could never give it up cold turkey," he laughed.

At Hambrecht & Quist, William R. Hambrecht retired on Jan. 1 as chairman of the San Francisco-based investment bank he founded in 1968 with the late George Quist. Although not a trader himself, Hambrecht's general-brokerage and investment-banking firm is a leading broker dealer and co-manages more than $5 billion in equities. Hambrecht is 62.

Daniel H. Case III, the firm's president and chief executive, will succeed Hambrecht.

Making an unconventional career switch, Jim O'Donnell, president and chief executive of New York-based HSBC Markets and its equity-trading subsidiary, HSBC Securities, will resign in the summer to join the Roman Catholic priesthood. O'Donnell is 36.

An HSBC spokesman would only say that O'Donnell's decision was a "very personal one," and that Krishna Patel, deputy chief executive of HSBC's equities division, is slated to assume O'Donnell's position as head of worldwide business on an interim basis.

Two other top traders, Richard Bruno, the 51-year-old head of the Nasdaq trading desk at New York-based PaineWebber, and Bob Mattis, senior equity trader at Jersey City's Troster Singer, left their firms recently. Mattis has landed on the trading desk cross-town at Sherwood Securities. Bruno, who stepped down along with six other traders as part of a sweeping reorganization, remains a consultant to PaineWebber. He was succeeded by Patrick Davis and William Heenan.

DE. Shaw Securities has embarked on a new business goal, elbowing for more room among the bulge-bracket firms that trade most of Wall Street's agency block orders.

The New York-based broker dealer is directing the operation out of its 50-person U.S. equities unit on the 25th floor of the firm's midtown Manhattan offices.

D.E. Shaw, named after its founder and president, ex-computer professor David Shaw, has a reputation for secrecy. But not when answering questions about its latest hardball tactics wrestling with the giants in the world of agency trading.

"We're utilizing our quantitative expertise and the customer relationships developed in our basket-trading business," said Mony Rueven, a managing director at D.E. Shaw, who heads the U.S. equities unit. "We have a great service."

Most recently, the firm installed a team of sell-side pros to fill the newest niche in D.E. Shaw's overall equity-trading arsenal, with includes a third-market business.

The team includes former New York-based Furman Selz pro Bob Rice, who heads a soft-dollar services unit working with a three-person sales-trading group that was installed last month. The sales trading pros are Tom Shapero and Adrienne Toscano, both previously with Jersey City's Sherwood Securities. They all report to Jim Willsey, head of U.S. equity sales.

"We weren't waiting for the business to come to us," Reuven said. "We put this team in place late last year to sell and to facilitate our block-trading services"

Facing stiff competition from powerhouses such as Los Angeles-based Jefferies & Co. and Cantor Fitzgerald of New York, Rueven was confident, however, that there is room for more players.

Nick Gianakourous, a vice president in D.E. Shaw's equity unit, said the firm averaged up to nine million shares monthly since it started doing agency business in early 1997.

"Our agency business grew by more than 300 percent for the year ended Dec. 31, 1997," he said. About 90 accounts alone were added in the last quarter, bringing the total amount of accounts to "several hundred."

D.E. Shaw is hoping that its quantitative expertise, and its three-year-old principal-guaranteed or basket-trading business, will provide a strong base to build a block-agency business, giving salespeople handling its single stock orders an important supply of inventory.

In addition, the principal-guaranteed and third-market business provides D.E. Shaw with customer relationships, including about 100 broker dealers and institutions on the third-market side, critical for finding natural counterparties on a trade.

A principal trade enables a customer holding a block order to transfer the inherent market risks to a dealer who purchases the shares for his own inventory. The dealer, in turn, hopes to unwind or profit on the position. A principal trade is utilized by many investors to quickly unwind a position in an illiquid stock. Conversely, investors sometimes find it cheaper to cross the stock on an agency basis in highly-liquid stocks.

Hoping to create a unified emblem and project its global breadth, the National Association of Securities Dealers has launched a new company-wide logo.

The corporate identity a blue globe swathed by an electronic circuit board will replace logos independently representing the NASD and its subsidiaries, the Nasdaq Stock Market and NASD Regulation.

"We want to let the world know we are one family of businesses," said NASD Chairman Frank Zarb in a prepared statement. "An integrated look is an important element in conveying this message successfully."

Zarb added that the new logo is expected to result in more than $1 million in annual savings. An NASD spokesman explained that a one-stop printing order will save the NASD money, as only one logo will be needed for the NASD and its two subsidiaries.

The spokesman would not disclose the cost of the design nor reveal details on how the contract for the business was awarded.

Clive Chajet, the New York-based artist who designed the new logo, said the NASD wanted to project a strong visual representation for Nasdaq in the design. "Other exchanges have a trading floor or building front as a symbol," Chajet said. "The NASD wanted to create a visual soundbyte for instant recognition."

Chajet added the NASD also wanted to project an international look with high-tech imagery. "I hope that the new symbol captures and symbolizes the NASD's message," he said.

PaineWebber stopped making markets in more than 200 Nasdaq stocks in the past twelve months, a source familiar with the New York-based firm's equity-trading desk said. The headcount is lower, however, than the number rumored earlier this month.

The source estimated that PaineWebber cut its list of Nasdaq stocks from 735 to 525 within the last year. The reduction was done gradually, and the firm had not cut stocks in recent months.

News of the cuts were first reported in Wall Street Letter, an industry newsletter.

The reduction in Nasdaq stocks may be part of a reorganization of PaineWebber's Nasdaq trading operations in recent months. As reported elsewhere, seven Nasdaq traders left the firm in November, including head trader Richard Bruno. PaineWebber refused to comment whether the resignations were forced or voluntary. Patrick Davis and William Heenan have succeeded Bruno as co-heads of over-the-counter trading.