Hard times in high-tech trading spark shake-up at Morgan Stanley
Article Abstract:
Morgan Stanley Group Inc, with its famous 'black box' computer trading operation, has been going through difficult financial times. The secretive high-technology trading operation with fancy software to track such things as parallel price patterns of stocks within specific industry groups made $50 million in 1987, but was only slightly profitable in 1988. The company has been hurt by the stock market's post-crash lethargy, a slower market, with less volatility and more high-tech competition. Morgan's operation, called Analytical Proprietary Trading (APT), thrived on pre-market crash price differentiations with software that tracked small price discrepancies and made big profits when the market moved rapidly. The company is in the process of reorganizing to match the current market's changing personality.
Publication Name: The Wall Street Journal Western Edition
Subject: Business, general
ISSN: 0193-2241
Year: 1989
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Balance of power: program-trading war masks deeper battle for market supremacy; 'old guard' seizes offensive, but rivals are bigger, richer and high-tech; civil war at the Big Board
Article Abstract:
The fight over program-trading, and more specifically, over index arbitrage of stock futures is concerned more with who will control the stock market than it is over market volatility. Many industry analysts see program trading as the scapegoat in a power struggle between the 'Old Guard' - traditional stockbrokers, money managers, New York Stock Exchange listed companies and floor traders - and a 'New Guard' - computer-wielding brokers at major firms, major pension fund clients and traders at the Chicago Futures Exchange. The 'Old Guard' appear to be winning the first round as almost all big brokerage and investment firms abandon program trading. Analysts point out the same thing happened right after the crash in 1987 and that most firms resumed program trading again.
Publication Name: The Wall Street Journal Western Edition
Subject: Business, general
ISSN: 0193-2241
Year: 1989
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PaineWebber pulls back from program trading
Article Abstract:
PaineWebber Group Inc has joined other major brokerage firms in retreating from the controversial practice of program trading. After pulling back from the practice after the Oct 1987 stock market crash, most Wall Street firms went back into computer-assisted trading after studies indicated that program trading was not responsible for the crash. Program trading is being blamed for large price swings in the market and many investors, and brokers feel institutional and retail clients are losing confidence in the stock market. Goldman, Sachs and Co and Dean Witter Reynolds have ceased or cut back on program trading.
Publication Name: The Wall Street Journal Western Edition
Subject: Business, general
ISSN: 0193-2241
Year: 1989
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Comment about this article or add new information about this topic:
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