Share and share alike?
December 2005, THE TRADE: Working for the Buy-side
Opinions differ on whether execution or research stands to gain more as a discretely priced service in an unbundled environment. Joe Gawronski, COO, Rosenblatt Securities, an execution-only agency broker headquartered next to the NYSE, expects research to be squeezed....While Gawronski sees the overall research pie shrinking, he does hold out some hope for independent providers. 'In a way, it may be easier for the independents, because if everyone has to be written a cheque, then you're comparing their research with a bulge-bracket firm's research and it's apples to apples.' <more>

Crossing Networks Attract New Entrants
December 2005, from Wall Street & Technology
…The Hybrid system has reserve and price discretion features of the broker-interest file - features in NYFIX, POSIT and Liquidnet, Gawronski notes. "If you have these features, that can possibly lead to a crossing network," he says. But, Gawronski stresses, though certain NYSE members have started talking about the possibility, nothing is set in stone yet. <more>

Resurrecting the Regionals
Winter 2005, from Advanced Trading / Wall Street & Technology
…But some industry observers say that while the regionals have a better chance of competing under Reg NMS, taking on the NYSE is going to be tough. "Certainly, [Reg NMS] puts them in a better position than they were in before," says Joe Gawronski, COO at Rosenblatt Securities, an institutional agency broker that is a member of the NYSE. "It says if you have the best price, institutions, brokers, and even other exchanges and ECNs will have to route there," continues Gawronski. "So, hypothetically, if Merrill Lynch, an investor in Philly, were to post [on PHLX] a bunch of aggressively priced limit orders from its retail flow, orders are going to flow there." That said, it is by no means a "slam dunk that the regionals will be able to take flow in the end," Gawronski cautions. "You can be first in line at Boston or Philly, but the NYSE is likely to be deeper because of its primary market status and undisplayed reserves and floor interest," he says. Under the NYSE's new Hybrid market, Gawronski notes, the specialist algorithms also will be capable of automatically matching away markets to prevent orders arriving at the NYSE from leaving. "Even if Boston or Philly is displaying 1,000 shares at the best price, and that order appears to be first in line, people are likely to hit New York first because it may have 20 orders of 1,000 shares each, so you actually are 21st in line at the regional when all is said and done," he says. <more>

Cost conscious

November, 2005, from Institutional Investor Magazine

....Another factor contributing to cheaper trading in the U.S. may be simply that costs are easier to measure there than in other markets globally. "Here you have an incredible amount of competition among brokers and a lot of clients using transaction-cost analysis," notes Joseph Gawronski, chief operating officer of Rosenblatt Securities, an independent agency brokerage that employs brokers on the NYSE floor and has an "upstairs" single-stock and program-trading desk. "But it's very hard for people to get high-quality cost analysis and use it to pressure brokers on the international front. As a result, the algorithmic offerings and other alternatives are not as sophisticated in some of those markets." <more>

Critics slam limits on independent research

October 31, 2005, from Pensions and Investments

....“Theoretically there’s no difference between bulge-bracket research and independent research. They should be treated by money managers the ame way under section 28(e)’s safe harbor, but the fact is they’re not,” Mr. Gawronski said, referring to the section of the Securities Exchange Act of 1934 that governs soft-dollar practices, which the SEC clarified in its latest guidance....“It’s much more difficult finding a way to get paid as an independent research provider than it is a bulge-bracket firm,” he said. “No one wants to increase their use of soft dollars and no one wants to write checks.” <more>

Roney Joins Rosenblatt Securities
October 28, 2005, from Wall Street & Technology <more>

Streaming Liquidity
October 26, 2005, from Wall Street & Technology
…Others like Pipeline because "there's no negotiation and someone can't back away," comments Joe Gawronski, COO at Rosenblatt Securities, an institutional agency broker and frequent user of Pipeline. "I can't play in Liquidnet - that's a buy-side-only product. So Pipeline expands the pool of liquidity, which allows me to participate..."  <more>

Rosenblatt Taps West Coast Trader
October 24, 2005, from Wall Street & Technology

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Increasing commission costs seen as good news
October 3, 2005, from Pensions and Investments
....Rosenblatt Securities’ Mr. Gawronski said with commissions where they are today, the brokerage industry is likely to continue consolidating. Large, bulge-bracket firms are the obvious natural survivor based on their order flow and ability to spend big sums of money on technology to assist institutional investors, and smaller, boutique firms will survive on their ability to be niche players and provide a high level of customer service, he said. <more>

Dynamic Substitution: Portfolio managers rely on traders for more than reducing transaction costs

Sept-Oct, 2005, from CFA Magazine

....“Quantitative managers have always factored trading costs into their models and thus focused on keeping them low, but over the past several years the focus on trading costs and impact on performance has broadened to a much wider group of more traditional money managers,” says Gawronski “This [has happened] for a variety of reasons, such as the pressures from plan sponsors to measure trading costs, the wider vailability of tools for transaction-cost analysis, and the impact that beating or missing the index to which you are benchmarked by just a few basis points can have on your ability to attract assets or your compensation.” <more>

NYSE Floor Broker Takes Measured View on Hybrid

September 2005, from Traders Magazine
"We generally endorse the elements of the hybrid that merely try to recreate the ability of specialists and floor brokers to continue to perform their current functions in an auto-ex world," said Joe Gawronski, chief operating officer of Rosenblatt. "But we oppose increasing informational advantages because such changes risk harming the public. They could discourage limit orders and destroy the delicate balance that makes the auction work well as it exists today and allows its benefits to be shared by all market participants, instead of just offering advantages to certain ones," Gawronski added. <more>

Wall Street’s scramble: Brokerage firms offer new services, but money managers seek elimination of conflicts of interest

August 22, 2005, from Pensions and Investments

… Joseph C. Gawronski, chief operating officer of Rosenblatt Securities Inc., New York, agreed. He recalled his firm resolved problems a client had using the New York Stock Exchange’s electronic order routing system, even though Rosenblatt wasn’t handling the order. “Maybe we saved them a ouple hundred dollars or a few thousand,” Mr. Gawronski said. “It’s not a lot of money, but it’s peace of mind that someone is looking out for their interests.” Similarly, helping clients understand major market changes such as the Big Board’s plan to create a hybrid trading structure and the SEC’s new Regulation NMS are ways brokerage firms cement relationships.

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Philadelphia exchange makes move to expand influence
August 8, 2005, from Pensions and Investments
… given the personalities behind the deal, other industry players said the longer term implications most likely have to do with equity trading. “Even if the options side of the business drove the investment decision, these players are smart enough to see the worth of Philly beyond options,” Rosenblatt’s Mr. Gawronski said. “The equities potential wasn’t lost on them.” Mr. D’Souza “understands automation and electronic market making — someone as savvy as he is, with Merrill’s (order) flow behind it — that’s significant,” said Mr. Gawronski. “You take Rohit’s expertise and history of innovation and Merrill’s order flow, combine that with Matt Andresen and Citadel’s big-time goals and you’ve got something that could be meaningful.” < more >

Soft Touch or Hard Line
June 27, 2005, from Securities Industry News
Competitive pressures may force broker-dealers to unbundle no matter what the SEC decides, according to Joe Gawronski, COO of agency brokerage Rosenblatt Securities in New York. "Between the numerous vendors now providing software that can track the assessment of broker-added value, the proliferation of transaction cost analysis tools and the buy side's focus on lowering expenses, we expect the trend toward unbundling to increase," Gawronski says. He expects the chief beneficiaries of unbundling to be agency brokerages, algorithmic trading providers and crossing networks. "A greater focus on execution quality and lower transaction costs--including commission rates--will make these types of providers look a lot more attractive," he says. < more >

SEC Adopts Reg NMS Amidst Change in Leadership
June 9, 2005, from Wall Street & Technology
"The NYSE is talking about the early spring for the final stages of the Hybrid functionality being available," says Joseph Gawronski, chief operating officer at Rosenblatt Securities, an institutional agency broker that is also an NYSE member. "That's a challenge in itself. But if Reg NMS isn't published soon and the final remaining Hybrid amendment approved quickly by the SEC, and if a new commission comes in and says it has to review everything from scratch," that uncertainty could conceivably add another year onto the schedule, delaying the "fast quote" market thatmany customers have lobbied for, says Gawronski. < more >

Human Traders Add More Value Than Algorithms
June 2, 2005, from The Financial Times
"...Our hope is that the number of studies analysing the benefits and costs of algorithms will soon catch up with the number of stories extolling their virtues and/or adoption rates, so that as an industry we can make sure we are fulfilling our duty to customers." < more >

May the Best System Win

May 25, 2005, from Wall Street & Technology
.... According to Gawronski, Thain was concerned that "If you combine platforms by taking that choice of Arca away, ... that flow will go to INET or Nasdaq." Gawronski says he believes that the NYSE sincerely plans to continue with both models and to let the markets choose which model is best...."The uniqueness of the NYSE model is working now, so to go to a fully automated model, I don't think they're planning to do it - the Hybrid is a much safer way of experimenting," says Gawronski. On top of that, the NYSE "doesn't have a huge incentive to go all electronic because if they do, INET and Nasdaq, as a combined entity, will have very similar echnology, and the NYSE would then be competing in a commoditized space," he says. < more >

Does algorithmic trading match its hype?
May 16, 2005, from Pensions & Investments
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Patience is the Reward in the NYSE Merger

May 2, 2005, from Pensions & Investments

Joseph C. Gawronski, chief operating officer of agency-only broker and NYSE member Rosenblatt Securities Inc., New York, said two factors might put a cap on the cost savings investors ultimately realize from the NYSE-Archipelago combination: less competition between market centers and the fact that a for-profit NYSE could push up costs to sell-side firms working on the exchange. Those costs would eventually flow to buy-side investors. "It's undeniable there will be cost savings," he said. "Who will they benefit? Will they simply benefit public shareholders (of the new NYSE Group), or will they flow through to users of the system?" "If they end up charging the sell-side more, that means the sell-side can't keep cutting rates," he added   < more >

Reg NMS Becomes Real
April 2005, from Traders Monthly
"I actually think the NYSE as an institution has a really good shot at defending its turf as long as it does a decent job with the hybrid, enhancing some of the natural advantages of the auction with automation, not destroying them," Gawronski says. "Some floor brokers, the ones stuck in the old ways, and those who are unfamiliar with algorithms or using ECNs, will get hurt by the hybrid model, though." < more >

Free Lunch? Why you should consider banks' implicit market-impact costs
March 24, 2005, from Traders Daily
With record 2004 profits at most of the bulge-bracket banks and proprietary trading a large component of overall earnings, it's no wonder that we are not hearing any loud complaints about this pressure on commission rates, which theoretically should be seriously crimping their margins. Excuse my cynicism, but is it possible that these banks are charging ever-lower explicit commission rates and then more than making up for that loss by trading on the information flow and causing implicit, or hidden, market-impact costs that dwarf the explicit costs? ...institutions must acknowledge the conflict inherent in investment banks' dual role...In short, when the most sophisticated and profitable banks in the world are giving away products virtually for free, it's probably about time to start asking some questions and attempting to measure and account for both implicit and explicit costs. < more >

The Downside of an Earlier NYSE Opening
March 2005, from Traders Magazine
Joe Gawronski, chief operating officer with listed and Nasdaq agency rokerage Rosenblatt Securities, said NYSE members would support an earlier opening if Big Board CEO John Thain could justify it as helping business... Gawronski adds that market share concerns are not an issue for the NYSE's potential earlier opening. "Today, ECNs and European exchanges trade miniscule volumes of even the very largest listed stocks prior to the NYSE open, so market share alone doesn't seem to justify the change," according to Gawronski. < more >

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Reg NMS: For or Against?
Spring, 2005, from Wall Street & Technology's Advanced Trading Magazine
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The International Securities Exchange Goes Public
March 10, 2005, from Wall Street & Technology
...However, Joe Gawronski, chief operating officer at Rosenblatt Securities, an institutional agency brokerage firm that operates on the NYSE, says, "As a former NYSE employee, Krell recognizes the unique value the NYSE system provides in terms of liquidity and price discovery for trading equities." Gawronski adds, "Outside of technology stocks where Nasdaq has carved out a niche, larger companies that can meet the NYSE's tougher listing requirements choose the NYSE for the prestige factor and the perception that capital raising is easier with such a listing..." < more >

Big Board Brokers Pack for the Hybrid
February 2005, from Traders Magazine
..For at least one floor broker, however, the functionality offered by systems for trading on ECNs is not good enough for hybrid. "If the exchange is not going to weaken its product dramatically," says Richard Rosenblatt, president of Rosenblatt Securities, "they have to provide a much more efficient interactive tool than is currently available on ECNs." Rosenblatt trades in both the crowd as well as upstairs. The trader wants the New York to load a menu of algorithms into e-Broker, giving him the ability to interact with Direct+ orders as he does with orders in the crowd. < more >

Mailbag: Shrinking Returns
February 7, 2005, from Barron's
Michael Santoli gets the broad business and regulatory trends right in his cover story ("The Big Squeeze," Jan. 24). Trading costs are shrinking and will continue to do so because of efficiencies brought by technology and vigorous competition among brokers.... The trend of decreasing explicit commission costs seems to be accompanied by its own costs that we're not sure are being adequately accounted for yet -- hidden costs arising from certain forms of principal trading activity... < more >

Sun Tries GNU Tactic
January 31, 2005, from Securities Industry News
... Rosenblatt Securities, for example, is one of a growing number of firms that has switched almost entirely over to Linux and Windows. Rosenblatt keeps some Sun boxes around for "historical reasons," according to CTO Ahmed Sako, but the firm isn't about to start moving back to Solaris. Instead, Sako says, Sun's decision to open source Solaris is good news for him because there are a few high-end Solaris features he's very much interested in. "I would prefer to see those advanced features available on Linux," he said. Over time, Sako says, he expects to see those features migrate over. < more >