1995 Year-End Review of Markets and Finance --- Review of Markets: Programs Made Up 11.3% of Volume On Big Board in '95
NEW YORK -- Program trading on the New York Stock Exchange accounted for 11.3% of overall volume in 1995, or an average of 39.7 million daily shares.</br></br>It was the most active year, in terms of volume, for the computer-aided trading activity that critics blame for causing artificially sharp moves in the market. But because overall volume also soared on the exchange, the percentage figure of 11.3% wasn't a record; indeed, it represented a decline from last year's 11.6%. (The record was 11.9% in 1993.)</br></br>The Big Board has released program-trading data since mid-1988, in response to an outcry over the multistock trading activity and its role in the 1987 stock-market crash. Program trading is defined as the buying or selling of a group of at least 15 different stocks valued at a total of $1 million or more.</br></br>The five most active program-trading firms in 1995 through the end of September, the latest numbers available, were Morgan Stanley Group Inc.; First Options; the U.S. unit of Japan's Nomura Securities; CS First Boston, a unit of CS Holding; and Salomon Inc.'s Salomon Brothers unit.</br></br>The best-known form of program trading is index arbitrage, in which traders buy and sell baskets of stocks with offsetting trades of futures and options. In 1995, such trading accounted for 30.3% of overall program trading, down from nearly 39% in 1994.