An Appraisal: Program Restraints Ignite Disputes Between Traders
The program-trading limits set last week by the New York Stock Exchange are designed to ease market volatility, but traders and analysts are taking a wait-and-see attitude.</br></br>While they wait, volatility and program trading are continuing to create rifts between the larger Wall Street firms, which regularly execute the programs, and the smaller houses, which find themselves scrambling to keep pace with market changes.</br></br>Feuding has erupted even inside some Wall Street houses, with equity traders and futures traders debating the causes of and solutions to the market's violent swings.</br></br>The stock market's volatility in the past three months has caused a number of changes in the way traders and investors operate. On block-trading desks, which frequently commit the firm's capital to complete trades, traders have become unusually cautious, and in some cases less accommodating in prices they will pay, says Dudley D. Eppel, who runs the block desk at Donaldson, Lufkin & Jenrette in New York.</br></br>Jack P. Baker, head of equity trading at Shearson Lehman Brothers Inc., New York, says large institutional customers also are changing their ways. "Everyone is so conscious of the volatility that they no longer say, 'I want to buy 500,000 shares at the opening.' Now they buy 25,000 shares at the opening and say they'll decide at 11 o'clock when to buy the rest."