Say bonds are trading at 95.00 and the market gets hit with some bearish news. The broker executes a large amount of orders for customers and his own account, and the market goes straight from 95.00 to 94.00. His Tills are 94.31, 94.30, 94.29 and all his customers get fills at 94.27 or lower. [Bond prices trade in 32nds.] How does he explain his way out of that one? He could give his order or his customers' orders to another broker. Or he could fill both orders and put
another broker's number on his own order. There are always ways to get around extra scrutiny. The smart crooks will
always be difficult to catch.
Is the temptation in dual trading too great? No. After having been through it, I would say that dual trading is good for efficiency in the marketplace, but it
is too heavy a burden for the individual.
Should the rules be changed to disallow dual trading? That is a difficult question. What is more important, the efficiency of the market or the integrity of the
individual? There is no doubt in my mind that dual trading adds tremendous liquidity to the system, and that is
probably more important than the fact that a small percentage of dual traders may cheat. Besides, even if dual
trading were banned, the stealers would still find a way to steal. That is their perception of how to make money in
this business.
When did you first get involved in the T-bond market? hi September 1977,1 moved to Chicago and became a broker on the T-bond floor. I was just twenty-five and
I got lucky. I went to New York in November 1977 and met with eight big-name companies, seven of whom opened
accounts. I was at the right place at the right time.
When did you start trading for your own account on the floor? In 1979.
Were you tempted to give up your floor brokerage so that you could concentrate on trading? Actually, it was just the opposite. I had started out as a customer's man, and from 1979 through 1981,1 built
a massive customer base. We were a powerful force in the market at that time. Probably the saddest thing I ever did
was to became a trader too. I was a great broker in my twenties, and if I had parlayed that for ten years, I probably
would have ended up where I am now without enduring all the pains of trading. I consider trading to be an
unrewarding, unglamorous game.
