Day One Trader
January 21, 2011
At the moment I’m enjoying John Sussex’s career memoir Day One Trader. He stumbled into the City as a 16 year old Essex lad, and ended up on the board of LIFFE. I’m interested in exchange trading, and there’s lots of good anecdotage on how brokers, dealers and locals worked order on the floor. I’m looking forward to Sussex’s account of the late 90s, and the battle with Eurex and the development of LIFFE Connect.
Coding the markets 
January 22, 2011 at 7:33 pm
Hi John,
I seem to recall the famous moment when the LIFFE Local David Kyte quit the floor, telling LIFFE officials that the future lay in screen trading, not open outcry – just found an article about it and his quote….
“However, this was too little too late for those traders who were already pushing for the development of screen trading. Typical was David Kyte, an independent trader who resigned from the Liffe board in March because of what he called a “build-up of frustration”. Formerly an outspoken advocate of open outcry, Kyte had now seen that the future was screen-based. “Trade will be by mouse, not mouth,” he said.
link here(http://www.independent.co.uk/arts-entertainment/the-end-of-liffe-as-we-know-it-1169825.html)
regards
Paul
January 22, 2011 at 10:49 pm
Paul: John Sussex mentions Kyte frequently in the book. Did you know Kyte or Sussex ? I’m really enjoying this book as it’s taking me back to when I started in the City in 97, and used to see the Liffe guys in their jackets on the street near my office.
January 23, 2011 at 5:58 pm
No, I didn’t know him personally (i go back even further, to the floor of the stock exchange – ancient really).
But have you seen this, which sort of sums up what locals do (a friend who is one sent it to me a while ago), it’s very funny!
http://www.zerohedge.com/article/i-trade-size
🙂
Paul
January 24, 2011 at 4:05 am
Paul, no I hadn’t seen that 🙂 Reading Sussex I had wondered about the tactics used by locals (or NYSE ‘specialists’), and how similar they are to the algorithms used by high frequency liquidity providers like GETCO. For instance, penny jumping. I guess the big difference is that with electronic orders books, all the orders resting on the book are visible to all level 2 participants. Not the case with an open outcry floor, where a broker can be sitting on an order and work it with other brokers, dealers, and locals. The overall state of the order book is distributed across many human participants, and is opaque.
January 24, 2011 at 9:36 am
On that point, and since you mentioned GetCo, I recently read a very good paper by them called “A Modern Market Makers Perspective on European Financial Markets Regulatory Agenda” here: http://www.getcollc.com/images/uploads/Final_EU_Paper.pdf
Paul