And remember that cpq was traded on nyse with a specialist who liked to match 5 or 6 million shares BEFORE he reported a sale.
I wonder if hpq has the same "specialist"?
NYSE specialists could see further consolidation
By Nicole Maestri and Tom Johnson
NEW YORK, Nov 20 (Reuters) - As money managers rushed to
sell shares of Royal Dutch Petroleum Co. <RD.AS> when it was
removed from the Standard & Poor's 500 index this summer, a
single New York Stock Exchange specialist suddenly found itself
with a very large bill on its hands.
In a matter of hours, Fleet Specialist Inc., the company
that manages the trading of Royal Dutch's shares, was forced to
buy roughly 11 million shares, or $462 million worth, of the
company's stock to help fill all the sell orders.
The purchase, which saved Royal Dutch's stock from a
crippling imbalance, could have been a disaster several years
ago, when a flock of smaller specialists ran share trading on
the Big Board. But Fleet's successful handling of the emergency
shows how larger, well-capitalized firms have come to dominate
trading on the NYSE floor.
But with just seven specialist firms left at the Big Board
-- down from 40 a decade ago -- the question remains: Is there
room for more consolidation?
For many the answer is yes.
"I could see it go to five," said Robert Murphy, the chief
executive of LaBranche & Co. LLC, the NYSE specialist unit of
LaBranche & Co. Inc.<LAB.N>.
Or a new player, who does not have a presence on the floor,
could enter the market and buy an existing firm, he said.
"Firms are always looking for other revenue streams and are
looking for other ways to be involved in different market
sectors," said Murphy, who is also a vice chairman at the NYSE.
"I think there's interest out there."
CONSOLIDATION
Specialists manage the buying and selling of individual
stocks at the NYSE and step in with their own money to buy and
sell shares if there is not adequate supply and demand.
Traditionally, many specialist firms were independent shops
that relied on one large listing for most of their revenue. But
as the market grew and trading volumes exploded, specialists
found they needed to lay more capital on the line.
For instance, Robb Peck McCooey Specialist Corp. lost a
reported $20 million on United Parcel Services Inc.'s first day
of trading from selling short too many shares, industry experts
said. The incident helped break up the family-run firm, which
ultimately was sold.
The consolidation wave means the five largest specialist
firms -- LaBranche, Spear, Leeds & Kellogg, Fleet Specialist,
Van der Moolen Specialists USA, and Bear Wagner Specialists LLC
-- now account for more than 95 percent of the NYSE's share and
dollar volume.
Many of the those firms have big-name backers. Goldman
Sachs Group Inc. <GS.N> owns Spear, Leeds; Fleet Specialist is
a unit of FleetBoston Financial <FBF.N>; and Bear Wagner is
owned by Bear Stearns Cos. <BSC.N> and Hunter Partners LLC.
The remaining two smallest specialist firms, Performance
Specialist Group LLC and Susquehanna Specialists Inc., have
long been highlighted as possible acquisition targets. Neither
firm returned phone calls seeking comment.
"They're profitable," one industry source said of the two
firms. "It's just hard to compete in the new world."
LET THE COMPANY CHOOSE
The new world means competing for clients. Instead of
assigning new listings to specialists, in 1997 the NYSE began
letting companies choose their specialist from a list presented
to them by the Big Board.
The switch has made it harder for smaller players to
compete because they do not always make it onto the list of
specialists offered to a new company. When they do make it on
the list, they go head-to-head with better capitalized firms.
"They're never going to be thrown in a pool (with other
specialists) when a huge listing comes in," said an industry
source. "It's just hard for them to compete."
But it's not just the smaller firms facing consolidation.
Another oft-mentioned target is Van der Moolen Specialists,
a unit of Dutch firm Van der Moolen Holding NV <VDMN.AS>.
"They have to get acquired by somebody because they are
just not large enough to be a real magnet for additional
listings of any size," said Jefferies & Co. analyst Charlotte
Chamberlain, who owns Van der Moolen shares.
Van der Moolen's listings include Cendant Corp. <CD.N>, Eli
Lilly & Co. <LLY.N> and Hewlett-Packard Co. <HPQ.N>.
"Do I feel like I have a target painted on my back? No,"
said Van der Moolen Specialists vice chairman Robert Fagenson,
of being acquired. "Does the possibility exist? Obviously."
BIG BANKS
There is always the chance that a large investment bank
could make a jump into the market or increase its current
presence, industry sources said.
For instance, Merrill Lynch & Co. <MER.N>, which sold its
specialist operations in 1998, has been mentioned as a
potential buyer. Merrill declined to comment, but sources close
to Merrill said the investment bank has little interest in
getting back into the business.
Banks won't make a move until the market rebounds and they
settle their current differences with regulators, experts say.
"They have their own issues to deal with at this point,"
said Sang Lee, an analyst with Celent Communications. "Until
that's all cleared up, I don't see any other major investment
bank making moves."
(( -- Wall Street Desk, 646 223-6173))
REUTERS
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