Chicago Stock Exchange (CHX) specialist Dempsey & Co. has inked an agreement with cross-town trading firm William Blair & Co. to jointly manage the specialist business of Dempsey and the CHX book recently sold by Raymond James & Associates.

The newly-created Dempsey Blair & Co., which follows a courtship of several months between the two firms, will be run as a subsidiary of both firms.

Dempsey Blair will handle more than 250 stocks, including 50 over-the-counter issues.

Respected

"Dempsey has a respected reputation as one of the leaders at the exchange," said John Kayser, William Blair's chief financial officer.

"I've been exposed to the CHX, and seen the great business the exchange has had in the last eight months. This is a great opportunity for us," he added.

Dempsey Chief Executive Lou Klobuchar Jr. was named chief executive of Dempsey Blair, and will oversee the specialist unit's 16 traders.

"I've gotten to know Lou [Klobuchar Jr.] well. He's a smart, hardworking guy. He was the logical choice to run this operation," Kayser said.

Dempsey had previously managed its own CHX specialist book, employing 12 traders covering more than 150 stocks.

William Blair, a full-service brokerage making markets in 185 Nasdaq and OTC securities, had no previous affiliation with a CHX specialist.

The deal was finalized late last month.

Operation

Technically, the acquisition of Raymond James' CHX specialist book of roughly 100 stocks was made by William Blair, which then merged the operation with Dempsey's CHX book of 150 stocks to create Dempsey Blair, Kayser said.

Terms of the deal were not disclosed.

Michael Barone, head of Nasdaq trading at William Blair, said the deal will not change how stocks are traded at his firm.

"The upstairs business at William Blair will not change," Barone said. "The Nasdaq business at Dempsey Blair will be a lot different from ours."

"That doesn't mean we won't ever deal with them. We're affiliated, but the structure of our trading department won't change," he added.

Klobuchar said no layoffs are planned as a result of melding the two operations.

New York-based Nash, Weiss & Co., the market-making unit of Fleet Financial Group in Boston, has changed its name to USCC Trading.

The new name reflects the firm's affiliation with Fleet-owned U.S. Clearing Corp in New York. The firm's new stock symbol is USCT.

"The decision to change our name correlates to the major investment we're making to grow our Nasdaq business and strengthen our trading team," said Neil Feldman, president and chief executive of Nash Weiss.

Nash Weiss hired Feldman in April to run the firm. Previously, he was a partner and managing director at Prime Charter in New York, where he headed the firm's Nasdaq trading operations.

Nash Weiss also hired James J. Welsh in April to assist Feldman in the management of the trading floor. Welsh was previously the head Nasdaq trader at Highlander Asset Management in New York.

Since taking the helm in April, Feldman has hired six traders and staffed a new institutional trading department.

All told, Nash Weiss has 70 traders and makes markets in more than 3,400 U.S. stocks.

According to AutEx, the Boston-based provider of trade data, Nash Weiss traded more than 1.79 billion shares in Nasdaq and over-the-counter securities in the first six months of 1998.

Nash Weiss was originally part of The Quick & Reilly Group, the New York parent company of U.S. Clearing Corp. and New York Stock Exchange specialist JJC Specialist Corp. Quick & Reilly had purchased Nash Weiss in January 1997.

In September 1997, Quick & Reilly was acquired by Fleet in a deal valued at $1.6 billion. Fleet is the nation's tenth largest bank, with more than $84 billion in assets.

A planned multi-million dollar fall advertising campaign is about to transform "The Stock Market for the Next 100 Years" into "The Market of Markets."

The marketing blitz, believed to be costing more than $30 million, will highlight the merger of Nasdaq and the American Stock Exchange, and inform investors about the opportunities ahead.

The campaign will stress the options part of the Amex business, telling investors they can trade more than 800 stock and about 30 index options through the Nasdaq and Amex marriage.

"The Market of Markets" was a catchphrase quickly seized upon by the National Association of Securities Dealers in the wake of the merger announcement. In some ways, the catchphrase represents an effort by the NASD to distance itself from an earlier catchphrase, "The Market for the Next 100 Years." That was used to deride Nasdaq by people SOES bandits included who were critical of its Nasdaq trading business.

Meanwhile, the fall campaign is eagerly anticipated by NASD and Amex staffers.

"The campaign will pack a lot of punch in television, radio and the print media," said one person familiar with the campaign. "It really does give Nasdaq and the Amex a great millennium image."

Armed with special Securities and Exchange Commission's correspondence, the owner of an Internet-based trading system said it is the first Internet trader with an SEC no-action letter

Peoria, Ill.-based Niphix Investments is planning to inaugurate its service next month with the $5 million initial public offering of Peoria's Clark Engineers.

Clark Engineers plans to issue 500,000 shares priced at $10 per share.

"A lot of small companies want to do Internet IPOs, and many Internet companies are doing offerings," said Nimish Gandhi, president of Niphix, and a distant relative of Mahatma Gandhi, the Hindu nationalist leader and social reformer. "But to my knowledge, we're the only company with a no-action letter."

Interest

Gandhi said a number of companies have expressed interest in issuing stock through Niphix, but so far only Clark Engineers has received regulatory approval from the SEC and the state of Illinois.

"We want to help small companies issue their stock and build a strong presence," Gandhi added. "Companies can get seasoned with us."

According to Gandhi, the SEC no-action letter, issued in 1996, allows Niphix to issue and trade over-the-counter stocks under a plan presented by Niphix. A no-action letter is a statement by SEC staff that informs a party the SEC will take no enforcement action against the party if business follows the approved plan.

A spokesman for the SEC declined to comment on the status of the Niphix no-action letter at press time.

Account Application

Investors using the system must complete and sign an account application and open a cash account with Niphix at a U.S. bank that provides escrow services.

Gandhi said the cash account allows Niphix to guarantee trades and to eliminate shorting and margin trading.

The firm has contracted with Computer Clearing Service in Los Angeles to clear trades.

Niphix is a member of the National Association of Securities Dealers and the Securities Industry Protection Corporation.

Niphix has competition on the Internet marketplace, however.

The most publicized outfit is Wit Capital, a 33-person New York broker dealer which has provided investors access to at least a dozen IPOs in the past 12 months.

Some people familiar with the industry said Internet trading could eventually challenge the current OTC marketplace.

"In the short term, Internet companies can't really compete," one expert said. "But down the road, if the OTC market gets overregulated and becomes less efficient, the Internet market could explode."

A heated battle is raging over the cost of delivering real-time stock-price quotations quotes made initially by New York Stock Exchange traders.

Traders, however, are unlikely to win or lose money if the dispute is settled.

At issue is opposition by online discount brokers to a real-time price-quote rate hike approved by the Consolidated Tape Association (CTA).

Pilot Program

The battle was spurred last year after the CTA implemented a pilot program bringing real-time price quotes to online discount brokers. The real-time quotes are provided to facilitate online investors who consider the traditional 15-minute-delayed data "stale."

Now the fees for providing the quotes passed along by the CTA, the group that controls the transmission of listed stock quotes among the nation's exchanges are hitting discounters' pocket books.

Priding themselves on immediate and low-cost transaction services for investors, many of the nation's estimated 80 online discounters say the hike in fees from one-half cent to one cent per quote is not fair.

Online Brokers

Joined by two of the nations largest online brokers, San Francisco-based Charles Schwab & Co. and Boston's Fidelity Brokerage Services, a campaign has been waged to curb the CTA's authority to set price increases.

The Securities Industry Association is supporting the campaign, urging the CTA to make the pilot program permanent and to implement a flat-fee pricing structure.

The SIA argues that a permanent program would require the Securities and Exchange Commission, instead of the CTA, to oversee future price increases, while flat fees would hold down discounters' operating costs.

The CTA and SIA have been meeting on the controversial issue.

Riding the real-estate rebound of the past three years, real-estate investment trusts (REITs) helped keep the new-issues market awash with capital.

But with Congressional legislation designed to tighten tax loopholes on the horizon, REITs have dramatically underperformed in recent months due to investor concerns, several industry analysts disclosed.

"To a large extent, investors have been over-saturated," said Meredith Whitney, an analyst who follows REITs for CIBC Oppenheimer Corp. in New York. "It will have to flush out considerably before we see REITs return to the capital markets in force."

Having lost investor interest, REITs offering stock in 1998 have performed under opening prices and jeopardized several offerings still in registration.

Twenty REITs companies that manage portfolios of real-estate holdings tapped the initial-public-offering market for $4.17 billion in 1997, building another $15.03 billion from 153 follow-up offerings. And new REIT offerings had remained relatively buoyant through the first five months of this year totaling $2.02 billion for 14 issues, and $6.54 billion for 136 issues in the primary and secondary markets, according to Securities Data Co.

But since May, there have been no IPOs, and only four follow-up deals.

Whitney noted that the enormous amount of capital already raised by new issues $27.93 billion since the beginning of 1997 has increased the cost of acquisitions and slowed activity among companies.

"Many of these companies have underperformed. If that were not the case, the cycle would have continued," she said.

While the Nasdaq composite index closed above 2,000 points for the first time in late July nearing a 16.8-percent gain the Morgan Stanley, Dean Witter, Discover & Co. REIT index is down almost 3.6 percent this year.

This year's 14 IPOs have found the aftermarket even more difficult, closing on average 5.2 percent below their offering prices in July.

Some market observers are predicting continued growth for the sector, albeit at somewhat slower levels. But bullish analysts claim REITs now offer a compelling investment vehicle for value-oriented investors.

"REITs clearly have underperformed in a significant way," noted Marc Paley, head of equity syndicate operations at New York-based investment bank Lehman Brothers, one of the sector's leading underwriters. "But we believe that we have come off of the bottom, and REITs will outperform the market in the second half of the year."

According to a recent report by analysts at St. Petersburg-based Raymond James & Associates, 13 of the 27 REITs the firm handles were trading at discounts as low as 26 percent of their net asset value.

The report stated that well-run public real-estate companies should ultimately warrant up to 15-percent premiums to net asset value.

Paley noted that due to longer lease terms, the office and industrial sectors of the real-estate market are the most likely candidates to fuel the first stages of a REIT turnaround.

Hotel operators, however, could prove to be the most fruitful long-term investments, said Mark Foushee, a real-estate analyst at Raymond James. With equity prices falling an average of 12 percent in recent months, the hotel sector was the most severely impacted among REITs.

"We continue to expect the most volatility in the hotel sector over the next few quarters, driven by the sector's susceptibility to swings in the economy and the current threat of overbuilding," added Foushee.

Foushee used LaSalle Hotel Properties (NYSE:LHO) as an example. The April 1998 offering trades at a 26-percent discount to net asset value.

The New York-based company, which operates three convention centers, two resorts and five full-service hotels, made its market debut at $18 a share. In late July, its stock price hovered below $16 a share.

"They came at the worst part of the market," Foushee said. "Their timing was just a little bit off."

Foushee strongly recommends the stock as a good, long-term investment, and expects its price to rise to around $25 a share.

Despite the sector's recent travails and lack of meaningful issuance, many analysts expect REITs to regain investor interest. By law, REITs must return 95 percent of earnings to investors.

"I suspect new issues will pick up dramatically, maybe sometime in the fall" Paley noted.

With the Labor Day already on the minds of many syndicate participants, it may take until the fourth quarter before the 13 companies in registration find a home for the $2.4 billion they are seeking.

Stephen Lacey is associate editor of The IPO Reporter, a sister publication of Traders Magazine.

Jay Suskind, head trader at Ryan Beck & Co. in West Orange, N.J., is frustrated. He must eventually sit for an exam he doesn't think is necessary. And he's too busy to get all the details.

Suskind is one of about ten professionals at Ryan Beck taking the new exam, recently introduced by the National Association of Securities Dealers for Nasdaq and over-the-counter traders.

At the moment, the Limited Representative-Equity Trader Examination, or Series 55, is a challenge for Suskind, given his other professional priorities.

Suskind hasn't seen the exam materials, and hasn't taken time to study. Frankly, he says, his busy workload doesn't allow him the necessary time to prepare for the exam.

Not to worry, though, Suskind was given a two-year grace period to pass a grace period granted, as of mid-July, to more than 15,000 professionals who registered for the exam ahead of the August 31 deadline. Suskind and the other professionals must pass the exam by May 1, 2000.

Even so, Suskind, a ten-year trading veteran, has reservations.

"The NASD could probably do a better job educating its members with regular training programs," he said. "I can understand the NASD testing new traders, but I doubt anyone trading has time to study for a new exam."

Sooner or later, however, all market makers, trading supervisors, agency traders and proprietary traders in Nasdaq, OTC and convertible-debt securities must take the 90-question Series 55.

Not all traders share Suskind's pessimistic view about the Series 55. To be sure, traders must juggle study time with their professional duties, but many acknowledge the exam's fundamental importance.

"Continuing education is never a problem," said Lou Todd, head of trading at J.C. Bradford & Co. in Nashville. "I just want our traders to get the exam out of the way so they can get back to business."

More than 30 traders from Todd's firm will sit for the Series 55 starting in August.

The exam will test traders in market making, trading systems, reporting rules, securities regulations and in other areas of responsibility.

The NASD said the Series 55 will help to establish consistent standards among professionals of the rules and regulations that affect their business.

The roots of the exam date back to the Securities and Exchange Commission's and the Department of Justice's 1995 investigations of Nasdaq.

"The exam is a way of ensuring that traders have been tested, and can be held accountable if they don't follow trading rules," said John Ramsay, deputy general counsel at NASD Regulation, the NASD's regulatory arm.

"The NASD, of course, is not naive enough to think the exam will stop infractions among traders," he added. "But the test makes sure everyone has a basic level of understanding."

John Pinto, who was a senior official at NASD Regulation when the Series 55 was first proposed, said the initiative for the exam was taken by NASD Regulation's Market Surveillance Committee.

"Market Surveillance felt that the trader's job had taken on new regulatory and compliance features," said Pinto, who now heads the Washington branch of Atlanta-based consultant Dover International. "The NASD recognized the time had come to better train its traders, and the SEC and Justice investigations pushed them in that direction."

During the investigations, Market Surveillance staff visited member firms, assessing the performance of Nasdaq and OTC trading professionals. After consulting with several senior NASD officials and making its assessment, Market Surveillance endorsed the creation of a new qualification exam for Nasdaq and OTC traders.

With the support of Market Surveillance, NASD Regulation prepared an exam proposal in 1996. Pinto said there was little opposition at the NASD to the Series 55. Market Surveillance, for example, unanimously endorsed the written proposal for the new exam, even though nine of the 12 committee members were traders.

Ramsay said the process of preparing the exam was rigorous, involving staff at the NASD and SEC through most of 1997.

"We wanted to make sure we covered every issue we felt was important, and that we had the right balance," Ramsay added.

The 90-question, multiple-choice exam is divided into four sections: Nasdaq and market-maker activities, automated execution and trading systems, trade-reporting requirements and securities-industry regulations.

The first section, covering Nasdaq and market-maker activities, has 47 questions and is the largest section of the exam.

A professional must correctly answer 63 questions, or 70 percent of the exam questions, to pass. Professionals must wait 30 days before retaking a failed exam. If the exam is failed more than three times, the waiting period continues to be 30 days, rather than the 180-day waiting period normally required by the NASD after failing a test three times.

The NASD is utilizing its contract with Sylvan Learning Centers to proctor the Series 55. More than 150 Sylvan locations nationwide have been approved by the NASD as exam sites. The Series 55 can be scheduled during regular Sylvan testing hours.

The closed-book exam is taken on a computer, and results are immediately available following completion of the exam. As accessories, Sylvan provides professionals scratch paper and basic electronic calculators.

Before taking the Series 55, a candidate must have passed the General Securities Registered Representative Examination (Series 7) or the Corporate Securities Limited Representative Examination (Series 62).

The exam fee is $60, while registration for applicants not yet registered as traders with the NASD is $85.

Ramsay says the test was not intended to create unnecessary problems for firms, emphasizing that the two-year grace period was one practical way the NASD has tried to lighten the burden.

"It's new, and it's one more thing for a firm to worry about," Ramsay said. "We want to make the Series 55 as relatively easy to take as possible."

Firms vary in how they are approaching the Series 55. Some desks have scheduled study courses for their traders, and plan to have them take the exam as soon possible. Other desks have shown little interest in preparing immediately for the Series 55, putting off the test until later in the grace period.

Peter Coolidge, head trader at New York-based Brean Murray & Co., provided his seven traders with an NASD-published study outline to prepare for the exam.

"We're not going to wait. We want to take the test as soon as possible," said Coolidge, who served on the NASD committee that helped formulate questions for the Series 55.

Coolidge thinks the exam relates well to what his traders should know about market making. Besides, he doesn't expect his traders to lose valuable time on the desk studying for the exam.

"I don't think it's a test that requires traders to sit for long hours and study," he said. "Our traders should already know a lot of the information covered on the Series 55, and they can study at night for the rest."

Dan Heenan, head trader at John G. Kinnard & Company in Minneapolis, who served on the same NASD committee with Coolidge, has already passed the Series 55.

None of the traders at his firm have scheduled to sit for the Series 55, however. "Not one person on my desk has asked me about the test. We don't even have any study material yet," Heenan said. "The desk has just been too busy."

At New York-based Sharpe Capital, Judy Payer, co-manager of equity trading, is scheduled to sit for the exam in August, alongside four compliance officers and trading managers from her firm. She expects up to 40 Sharpe employees to eventually sit for the exam.

"We want to get a good impression of the Series 55 right off the bat," Payer said. "If we get a feel for the test, we can help prepare everyone else to take it."

Early this year, the NASD published a study outline for the Series 55. The 12-page pamphlet includes a brief outline of the exam, four sample questions and a list of test references. All material covered on the Series 55 is available from manuals on the reference list.

Aside from the NASD's material, a number of companies are providing training courses and study guides based on the NASD outline.

New York-based Securities Training Corporation (STC) is offering 17 one-and-a-half day training classes this year, in Chicago, Los Angeles, New York and San Francisco. STC will also schedule classes tailored for the schedules and needs of individual firms.

STC offers a 250-page study guide for the Series 55, with four practice exams and a bank of 360 questions.

Todd Rosenfeld, who is in charge of the STC's Series 55 initiative, said the STC course and study guide cover every point mentioned in the NASD outline.

"Our study guide has everything that could possibly be included on the test," Rosenfeld said. "The classes streamline what's covered, and help motivate traders to study."

Rosenfeld recommends that traders either enroll in a class or read a study guide.

"There are certain things that will be covered on the test that traders might take for granted if they don't study," he said. "A good training program will make sure every base is covered."

Similar training courses and study guides are also being provided by Atlanta-based Investment Training Institute (ITI ) and Chicago's Dearborn Financial Training.

ITI is a subsidiary of Atlanta-based Dover International, the consulting firm represented in Washington by John Pinto.

"ITI created a program that will help traders understand the complex rules and regulations covered in the exam," Pinto said. "ITI's study material will give traders a requisite understanding of what they need to know."

ITI has scheduled six 16-hour training classes through August in New York, and four classes at offices in Atlanta through September.

The ITI training program was reviewed and publicly endorsed by the Security Traders Association, representing more than 7,000 equity professionals. (The STA will receive royalties from ITI for the endorsement).

At J.C. Bradford, Todd said the compliance department has prepared its own training course and study guide for the firm's traders.

"A lot of people get worried about tests, and some traders have complained about this one," Todd said. "Our program will get everyone ready to take the test."

Todd hopes the exam enhances the image of the trading industry.

"I think this is an NASD effort to upgrade the quality of the industry and get rid of some of the rogue brokers," Todd added. "I know people have complained about the new exam, but I don't think good traders have anything to worry about."

Meltdowns in Asia. Currency swings in Europe. Foreign equity traders in the U.S. have faced these horrendous challenges. Not always in the eye-of-the-storm, trading desks regularly take positions in foreign stocks buying and selling American Depository Receipts and ordinary shares of overseas companies listed on U.S. exchanges

Some desks trade non-U.S. stocks in their primary markets. Scudder Kemper Investment, a financial-services and mutual-fund behemoth with more than $200 billion in assets under management, is a leading example. Maureen Nevin Duffy joined Bellaro and his team one morning on the pre-dawn opening of the European trading session at Scudder's offices on 345 Park Avenue in midtown Manhattan.

Who said Mike Bellaro's life is glamorous? He's 36, living in the New Jersey suburbs and he has a high-powered job running one of the largest 24-hour global trading desks on Wall Street.

Glamorous? Not so fast.This may be one of the toughest buy-side grinds in the business.

Consider Bellaro's schedule. At 1:45 a.m., his wife Evelyn and two young sons, Christopher, seven, and Thomas, four, sleep soundly, but Bellaro is already wide awake ready to telephone his German broker from home in 30 minutes. The coffee is brewing and Bellaro's next telephone call will be to Jennifer Gaulrapp, who runs his Asian and Far East session out of New York.

At 2:45 a.m., Bellaro, the senior vice president of international equity trading at Scudder Kemper Investments, is travelling a lonely highway on his way to work in New York.

The evening before, this reporter called Bellaro at home to check out the arrangements for Traders Magazine's visit to his desk. His voice rose above the din of his two rambunctious boys in the background. He was about to hit the sack. "Don't call me back after 7:30 [p.m.] tonight."

Early Bird

At 4 a.m., making my own way by car, the aroma of freshy-brewed coffee clings strangely to the air on the New Jersey Turnpike. Later, in midtown Manhattan, I pull into a parking garage, too early for the early-bird special and am socked for $30.

The main Park Avenue entrance to Scudder is closed, so entry is made from Lexington Avenue, where an elevator brings me to the 25th-floor trading room.

There are no windows in this long, narrow room. Day and night seem inseperable. Time seems suspended. "We are now living in trading time," says Bellaro, convincingly.

Arriving at the office in the predawn hours may not be every traders notion of the good life, but this is Bellaro's routine five days a week. Besides running the global desk, Bellaro shares the European beat with Erin St. John. He is responsible for Germany, Switzerland, Italy, Scandinavia, Global Depositary Receipts and international convertible bonds.

On Saturdays, Bellaro, a dedicated family man, relaxes at home. There's a catch, however. "No matter where you are in the international arena today," Bellaro says, "it is a 24-hour job every day of the week. There isn't a moment when you're not on call."

The desk reopens Sunday evenings at about 6 p.m.

Bellaro is philosophical about it. "To be truly committed to what you do, to be the best trader, you have to be dedicated," he says.

Trading Room

A four-foot-high fabric partition divides the trading room, on either side of which traders hunch over workstations and telephones. Reference materials and coffee-stained Wall Street Journals reach for the ceiling. Bellaro's two boys smile down from picture frames balanced atop his Bloomberg monitor, alongside magazine tearsheets of Scudder's portfolio managers. Back in New Jersey, his boys are still asleep.

Absent from the trading floor this morning is Jennifer Gaulrapp, who moved to the 6 p.m. to 4.am. "night" shift to help Scudder boost the business during those hours. Gaulrapp had packed it in at about 3 a.m.

Down the row of alert faces, Tom Davis, a senior associate, scrolls the Bloomberg monitors, looking out for names in the news and major events. He monitors the Reuters quotes. Later, he'll write a senior-management report of his assessment.

Davis staffs a two-panel telephone system with 14 pages of extensions and auto dials. A Merrin Financial Trading Platform for Windows blinks out the desks' working orders.

On the opposite side of the partition from Davis, Audrey Stephens gathers the trade confirmations that have accumulated overnight on the Asian desk. Stephens has reasonably conventional hours she commutes from Brooklyn for a 6 a.m. start.

Stephens matches the confirmations and books the completed orders. Later, she'll call brokers in New York working the unfilled orders. The accounting system, meanwhile, will receive the trades that have a print and are confirmed.

Hopping Phones

By 6:35 a.m. the telephones are hopping. At 7 p.m., the currency and Latin American and emerging-market traders arrive. Stephens' cool demeanour belies her heavy workload. Running compliance checks, Stephens flags any orders with foreign-exchange exposure and sends them to the currency blotter handled by Frank Messina.

Messina's mission is to reduce or eliminate clients' currency risks after the orders are confirmed. That might involve immediately buying a foreign currency to cover an executed trade. Messina is posted on the Asian business until he switches to the European desk at about 9 a.m.

At 9 a.m., Nestor Melendez, who picked up Gaulrapp's beat on the Latin American and emerging-markets desk, monitors the Brazilian market.

Meanwhile, Bellaro, looking dapper in a sharp suit, a shock of gray around the temples and a pencil moustache accentuating his authority, listens to Messina's telephone conversation. Bellaro is studious. The banter between Messina and his currency brokers gives him valuable market insight.

A shock development in Brazil's equity markets could hurt Bellaro's German holdings or other European stocks. Europe is his beat. A consummate expert, he knows how to duke it out in London, Paris and on any European exchange. Don't ask him to switch to other regions.

After a four-month stint covering a different region, it took him about four weeks to reacquaint himself with Europe. Part of the reason is purely physical. The biological clock needs time to readjust.

Moving back and forth between regions is problematic. In the business, Bellaro says it takes time to discover the players holding certain stocks, to unscramble their strategies and find "who has the flows in particular."

"It's wise to have people who are familiar with the product groups. You lose something if you switch people around," he adds.

The Thesis

Bellaro says he works with a thesis based on current information. "I teach traders to form a thesis about what the market and the stock itself is going to do. The point is to believe your thesis is correct," he says. "The worst thing you can do is make a panic decision." Bellaro's thesis depends on such elemental factors as price risk and reward objectives, and the supply and demand of stocks. "A good trader recognizes when the thesis is not correct and changes his opinion quickly not in a panic but quickly," he explains.

"That's where the team interaction comes in," he adds, "because gut feelings about how the market seems to be headed are shared with other traders and are either reinforced or corrected based on this interplay."

Bellaro says that is the key to a successful trading operation.

Normally, Bellaro's desk is swarming with activity. But this is the Thursday before the long July 4th weekend, and Bellaro apologizes for the slow market. He has started the day with only seven orders to work, whereas he'd normally have between 100 and 200 orders for European trades. Between questions, he takes a call.

"No. I'm interested but…[pause]. I'm thinking of selling it. Take a look at my blotter."

The most difficult moments in recent memory occured during the Asian crisis last fall. Two new Scudder traders were learning the beat when Asia started to slide badly. "It was very different for them to learn how to trade with 20-percent to 30-percent price swings," Bellaro recalls. "It's not like a bull market, where you buy on the open and look like a star at the close."

Stressful? "Yes, but at the end of the day," Bellaro says, "you have to have confidence in the stock market and the currency."

Like other institutional investors, Scudder's portfolio managers and research department determine what to trade, leaving Bellaro's trading desk full discretion on where and how to trade.

"The goal is to obtain the best execution possible, and to add value to the investment process," Bellaro says. "The desk is free to trade with any broker that can accomplish the task and has met [Scudder's] financial criteria."

The job is getting tougher though. Consolidations among brokerage houses and fund-management firms have had a knock-on effect in two ways: it has reduced the pool of brokerage houses from which to work an order, while the average size of each order has grown.

This is a major concern as Bellaro tries to assemble the most capable team of traders and to develop broker relations. "Can we move equities without impacting the price, as these orders grow larger and larger?" he asks incredulously.

Bellaro is watching the worldwide industry consolidation among financial-services firms with a careful eye. Experience tells him that having good broker relations is mightily important

"It's important to choose the right broker, one who is as discreet as possible if we have an illiquid stock," Bellaro explains. "If we indicate to three brokers that we're selling XYZ stock, and they call their clients for their interest, it can look like there are three sellers and create a panic in the market."

Electronic trading supplements the role of human brokers. Bellaro sometimes uses Instinet, the Reuters Holdings-owned electronic agency broker, widely used on Wall Street for trading domestic stocks, and increasingly active in international stocks.

"Now we can control an order, directing it to the Swedish Stock Exchange through Instinet. So not even a broker knows what I'm doing anonymously," Bellaro adds.

Though trading is relatively anonymous, there is one catch instead of a broker following the stock, Bellaro has to do it himself. "That's fine if I have time," he shrugs. Brokers play an invaluable role, he adds, but he thinks Instinet may reap opportunities to handle more foreign business given the current industry consolidation.

Global Syndicate

Global syndicate deals are an important part of Scudder's international business. For St. John, who runs global syndicate, that's been a factor in her domestic arrangements. She and her husband, John Duggan, a civil engineer, live in Manhattan's Battery Park City. When Bellaro is absent on Scudder business, St. John takes charge of his European beat as well as her permanent responsibilities for covering equities in France, the U.K., the Netherlands, Spain, Portugal, South Africa and Ireland.

Historically, new issues in Europe were priced and allocated on Monday mornings (European time). That, of course, gave Europeans first dibs on the allocations. When U.S. trading desks protested enough, Scudder being prominent among them, allocations on Sundays for U.S.-based investors were introduced. What that means is another workday for St. John.

With allocations on Sundays, a European broker will call St. John at her home on Sundays, informing her of his percentage of the initial public offering and the proportion available to Scudder.

St. John then runs Scudder's IPO allocation model for each investment fund or product group, including small-cap, global, emerging markets and other funds.

St. John contacts the portfolio managers, informing them about the allocation they received in the deal, providing them some color "as to what I think the stock will open at in America."

If the investment is for the long term, the portfolio manager may ask her to get more shares in the aftermarket.

The portfolio managers will sometimes share the burden of erratic working hours.

"Often, I'll wake them up at 4 a.m. to talk about what I think is happening," says St. John, referring to Scudder's portfolio managers. They in turn might tell her to buy until the issues reach a specified price. St. John must ensure that Scudder is getting its predetermined proportion of allocations.

This morning, St. John is watching ten deals. "I don't have a problem with that. I'm comfortable," St. John is overheard telling the broker calling about pending allocations.

Allocations are not the only reason St. John has to toil on weekends. A weekend general election in France could require her to keep in contact with brokerage sources in Europe because the outcome could impact the stock markets.

Meanwhile, other traders are filing in with their coffee and bagels. By now it is nearly 9 a.m.

Bellaro is pacing the trading floor looking satisfied. He mentions he is flying to London later in the day on business. His face tighens a little. He hopes, he says pensively, that the flight is smooth.

Some risks can't be controlled.

An industry expert has identified four trends that are propelling the mergers and alliances among some of the world's top stock exchanges: automation, consolidation, internationalization and deregulation.

"These trends are accelerating faster [than ever before]," Pace University finance professor William Freund told the mid-summer conference of the Security Traders Association in Chicago.

Citing the four trends collectively calling them ACID, the acronym formed out of their first letters Freund warned that they will determine "the winners and the losers among stock exchanges."

"This is a game that will never end completely," Freund said. "There will be tough battles ahead. There will be winners. There will be victims. There will be new markets competing, markets that perhaps are only now on the drawing board."

Lou Klobucher Jr., chief executive of Chicago Stock Exchange specialist firm Dempsey & Co., told the STA conference that exchanges need to understand the challenges they face, "and the declining advantages they possess."

"This requires understanding of broad trends in the industry, the explosive growth of corporate equity markets, and the equally explosive growth in trade volumes," he said.

Asset Appreciation

Meanwhile, as stock exchanges in the U.S. and abroad go courting each other, a more fundamental trend stands out: institutional and retail investors scouring the globe for asset appreciation.

Even though trans-national stock purchases are subject to the economic vagaries of each region, most experts agree that investors are eyeing opportunities outside their domestic borders.

Foreign investors were heavy purchasers of U.S. equities in the first quarter, at a pace exceeding the total bought in every year except 1997, according to the Securities Industry Association.

The purchasing of foreign securities by U.S. investors during the same period, however, slowed to the lowest point in the 1990s, though U.S. investors have renewed their interest in emerging markets, the SIA said.

Talks and rumors of talks among stock exchanges worldwide is indicative of how investors' capital is swirling about the globe.

Globally, Nasdaq and the Deutsche Borse, the German stock exchange, have proposed a joint marketing and listings arrangement. The London, Frankfurt and Paris stock exchanges are planning a Pan-European alliance.

Domestically, exchanges are also tieing the knot.

The National Association of Securities Dealers, for instance, is merging with the American Stock Exchange, and will be joined by the Philadelphia Stock Exchange.

The Chicago Board Options Exchange and the Pacific Exchange have an agreement in principle to merge.

Freund told the STA Conference: "Markets like the AMEX and the regional exchanges are feeling a great profit squeeze, and at the same time political pressure from their members."

As the automation of trading heats up, he said, technology costs have escalated. "These consolidations will, in the end, bring about fewer and larger surviving markets."

Monetary alliances most notably the European Monetary Union, which takes effect January 1 will spur the international consolidations, Freund said.

The Euro

Freund believes the alliance of the London, Frankfurt and Paris stock exchanges will be London's entry ticket for the planned European currency, the euro, and that the New York Stock Exchange may soon form a partnership with the Paris Stock Exchange. "Location is not nearly as important as it used to be," he said.

Globalization may ultimately render domestic regulations less relevant, unless regulators can internationally agree on some new ground rules.

"Some of the bureaucrats are realizing that fact," Freund said.

Strategy

More than ever, stock exchanges across the globe need to prepare strategically for the bout of alliances ahead, Klobuchar told the STA conference.

"I would refer to our present situation as a strategic inflection point,'" Klobuchar said. "We are at a time of life in the business when our fundamentals are about to change."

Klobucher said the changes compel exchanges to understand their competitors, "whether those are other exchanges, the third market, newer alternative trading systems, not to mention other investment vehicles and foreign countries."

"It requires, as never before, that the exchanges understand who their customers are, and who they want their customers to be," he added.

A telling sign of the torrid bull market is the aggressive efforts by stock exchanges to gain market share over their rivals.

Klobucher said that to increase their market share, exchanges must first provide unique advantages to customers, such as superior transaction and execution services.

He said market share is a better measure of an exchange's success than trade volume.

"Market share is a more discerning, maybe more brutal measure, because it tells you how you stack up to the other choices," Klobuchar said. "To remain viable, much less successful, exchanges must be driven for market share as are the companies with which they trade."

"In a period of explosive and unprecedented growth," Klobuchar added, "you would hope any exchange traded more volume this year than last, more last year than the year before."

Scudder Kemper Investments is ranked among the top ten buy-side firms in the globe as measured by assets under management and trading volume. The New York-based firm will become even larger with its planned acquisition of London-based Threadneedle Asset Management later this year.

Scudder itself is the successor firm of Swiss insurance giant The Zurich Group and investment manager Scudder, Stevens & Clark, which merged on Dec. 31, 1997.

Scudder's ten-person 24-hour international equity-trading desk in New York runs three shifts: Europe (3:30 a.m. to 2 p.m.), Latin America and Canada (7 a.m. to 5 p.m.) and Asia (6 p.m. to 4 a.m.). The desk is closed on Saturday, reopening Sunday at 6 p.m.

Scudder's international desk is headed by Mike Bellaro, who reports to Peter Jenkins, the overall head of equity trading and managing director at Scudder. For Bellaro, managing the desk means rising at 1:45 a.m. for work.

Bellaro's typical schedule:

1:45 a.m: He wakes.

2: 15 a.m: German market opens. Bellaro telephones German broker "to discuss what's going on in the rest of the market and instruct them on my orders." (German markets open at 2:30 a.m.)

2:30 a.m. to 2:45 a.m: He telephones Jennifer Gaulrapp, who runs the Asian and Far East desk at Scudder.

2:45 a.m. to 3:45 a.m: Drives to work. No ordinary commute, he is in constant contact with his brokers. Later he will be too busy to give them his full attention.

3:45 a.m: He arrives at Scudder's 345 Park Avenue office. Barring meetings, his office day usually ends around 2 p.m. On his drive back home and until 4 p.m., he will stay in touch with Latin American trading.

4 p.m. to 5 p.m: He takes calls at home. Brokers will review their assessment on the day's sector flows and overall market activities.

5 p.m. to 8 p.m: He discusses tomorrow's strategy with the fund managers. Time out? His phone is never turned off, even when he hits the sack by 8 p.m. The call may mean business. M.N.D.