Terra Nova (Jerry Putnam) and Townsend Analytics (MarrGwen and Stuart Townsend) are the principals of the Archipelago ECN (the SEC references to this are in a previous post), and they first started trading for their own account Nasdaq Level 2 back when they were principals of the Chicago Trading and Arbitrage SOES room along with Lewis Borsellino.
An ECN as I understand it falls under different rules than that of a Market Maker in an individual stock, and even if it did not and the rules were tightened up, Putnam is good with skating by rules. The simple answer I have for you is that I would not personally ever direct an order through the Terra Nova ECN. It is very interesting to note that the former Securities Exchange Commissioner, Richard Roberts helps Terra Nova out; I talked to Roberts earlier in the year. Roberts is now at Reid & Priest, L.L.P., 701 Pennsylvania Ave, N.W. Washington, D.C. I had heard that he was on Terra Nova's payroll as an advisor, and he confirmed this with me when I talked to him. He made an appearance on Terra Nova's behalf at a function they held at the Union League Club last year, and also at a branch office of Terra Nova. The Union League Club function he confirmed with me; the other appearance I read in a news story about a Terra Nova branch office.
An interesting side note, sophisticated trading is nothing new to Terra Nova. Shortly before the sick games were played with me in 1995, I saw Jerry Putnam aggressively use a computer program to access the RAES system (Retail Automated Execution System) at the Chicago Board Options Exchange (CBOE) to arbitrage dual listed options between the CBOE and the Pacific. He had a computer program look for when a quote was slow to be updated by the marketmakers on one exchange, and then use the RAES to do one side at the CBOE, and the Pacific system to do the other side. Why was this wrong? The RAES system was built to be used by only!! "retail" customers and there were rules to this effect. Why then was Putnam using the RAES and Pacific exchange automated systems when we were "professionals" (Terra Nova was a broker dealer not a retail customer)? When I brought to his attention that he could not park these trades in the Terra Nova account and that this idea of his could back fire and destroy Terra Nova, he went ahead and parked all these trades in his wifes account over my objections. I want it to be crystal clear that I did not receive one penny of any profits associated with this options trading at Terra Nova. So even though all this trading took place at Terra Nova (his wife was never at the office) it was still a significant abuse of the RAES and also the Pacific system that he used to bang out tons of trades a day. I thought this was wrong and told him as much. I had spent years on the floor mainly filling OEX options but I also did some floor trading before I spent some time at the Chicago Mercantile Exchange. Thus I am quite familar with what goes on at the CBOE through my friends who are still there.
|
