|
 |
From Investor's Quarterly, Winter 2002:
When is a seat worth more than $2 million, even though one can't sit on it and it's nearly 400 miles away? It's when that "seat" represents membership in the New York Stock Exchange. Parker/Hunter has distinguished and unique connections to "The Big Board," as the NYSE is sometimes known.
Celebrating its 100th anniversary, the firm has owned a seat since its founding. The firm can even brag of a prestigious connection to the NYSE, through former Parker/Hunter vice chairman Mabon Childs. His grandfather, James B. Mabon, actually was the president of the Exchange in the early 1900s. Mabon joined the Exchange in 1891 and later served two terms as its president.
The Exchange is different from the Nasdaq system. Nasdaq supplies price quotations via computer for thousands of companies. But it has no trading floor anywhere to auction those stocks, as does the NYSE. There are advantages other than prestige to being an NYSE member, or seat owner. Basically, membership on the Exchange gives a firm the right to put its own traders on the Exchange floor to execute the clients' buy and sell orders. Alternatively, a firm would contract with a member firm to act as a correspondent and execute a trade, either on the floor or through the NYSE's electronic order-entry system.
The vast majority of client orders to buy and sell stock on the NYSE are presented electronically. More than 75 percent of those transactions are completed in less than 30 seconds, according to Exchange data. But larger orders often go through a so-called "specialist." That person is registered with the Exchange to assure fair, timely and orderly trading in specific stocks.
Specialists are strategically scattered near the center of the Exchange floor at 17 different "trading posts." They loosely resemble high-tech hot-dog stands, festooned with lighted computer screens overhead and equipped with wireless systems to keep specialists on top of relevant data.
Parker/Hunter does not employ specialists, but its traders have easy access to them on the floor. Such access can produce a better buy or sell price on large orders where one penny up or down makes a big difference and which can be harder to fill electronically all at once.
Joseph Marando, one of two Parker/Hunter floor traders, takes to his post at least a half-hour before the exchange opens to get a "pre-look" at price trends. He studies futures markets for transportation, retail and other sectors.
"If the markets look weak, for instance, you'll see an imbalance on the sell side," said Marando. Joe is one of roughly 3,000 people working the floor of the Big Board on any given trading day. Traders swap stocks in roughly 2,800 listed companies from 340 phone-equipped trading booths scattered around the perimeter of the exchange.
"We also use Joe for intelligence on what's going on in different stocks," said Bob Kampmeinert.
Marando, a 23-year NYSE veteran, executes anywhere from 300 to 500 trades a day, but not just for Parker/Hunter clients. Like other firms, Parker/Hunter floor traders will execute trades for about twenty other firms or institutions for a fee.
"It's a business unto itself," said Kampmeinert. Often even the largest firms, like Merrill Lynch, have more orders than they can handle and employ rival firms to complete the trades.
Kampmeinert himself is involved in a key NYSE role these days, too. He is the immediate past chairman and current member of the Exchange's eight-member nominating committee. The board includes such luminaries as former Ford Motor Co. Chairman Alex Trotman, J.P. Morgan Chase Chairman William Harrison Jr. and Viacom President (and former Westinghouse Electric Corp. radio chief) Mel Karmazin. Bob is also the current chairman of the NYSE's Regional Firms Advisory Committee.
 |
 |
