TRADING

High Noon for High Frequency

Will regulators say:

Not so fast? PAGE 6

HOW WALL STREET OPERATES

Volume 21 Number 17 • August 3, 2009

RISK p. 8 Filter for fat fingers

OPERATIONS p. 10 Unsettled in Europe

EXCHANGES p. 14 A marketplace of ideas

TALENT p. 21
Speed recruiting

In Options, It’s Season of High-Speed Roll Outs

By John Hintze

NASDAQ TOOK TWO STEPS in late July to shave microseconds—and maybe even milliseconds—from the time it takes to trade options on its OMX PHLX exchange.

On July 21, Nasdaq introduced a direct feed of market data, bypassing the consolidated quote and order data supplied by the Options Pricing Reporting Authority (OPRA).

Two days later, Nasdaq shifted the OMX PHLX’s trading activity to the high-speed XLII order-matching engine that is used by its eq-

CONTINUED ON PAGE 13

SPECIALREPORT
60 Days to
Decision Day
Morgan Stanley Smith
Barney Finalizing Plans
To Unify Brokerages
ByJohnHintze

MORGAN STANLEY SMITH Barney, the joint venture sealed in January merging two gigan-

tic brokerage units, plans to finalize major operational and technology integration decisions in the next two months.

But its 20,000 financial advisers will begin seeing improvements in the products and services they can offer clients even before then, such as changes in its unified managed account program that will improve upon each original firm’s separate offerings.

The new brokerage was born in January, when Citigroup agreed to merge its brokerage, Smith Barney, into

Morgan Stanley’s competing
business. But the merger of
derivative securities. Or deter-
mine risks, across all kinds of
complex economic scenarios,
before trades are made.

So who is Bank of America Merrill Lynch trying to get to make sense of all that power, in ways it can’t currently conceive?

High schoolers.

For three days in late July, Bank of America and Intel, the maker of the “multicore” processors that need to be tamed, ran a boot camp for 15 students and six teachers at

CONTINUED ON PAGE 19

CONTINUED ON PAGE 22

Many investors still

have not been bailed out. Yet one seller of auction-rate securities might like to be.

FULL STORY ON PAGE 18 SCANDAL

WITH A LONG TAIL

CASE STUDY

securitiesindustry.com a SourceMedia brand

Fast Times at Brooklyn Tech

Putting Wall Street Programming in the Hands of High Schoolers

By Tom Steinert-Threlkeld NOT TOO LONG AGO—CALL it the dawn of this decade—it was a pretty big deal to write programs that made coordinated use of 64 different computers.

This was called parallel programming.

In the not too distant future—call it the dawn of the next decade—the same 64 processors that used to be spread across all those computers will be contained on a single microchip. Code jockeys will have to figure out how to