Date: March 21, 2004
Publication: Wall Street Letter By: Raul Gallegos

Veteran Floor Broker Pushes Research

Rosenblatt Securities Inc. (RSI), a long-time broker on the floor of the New York Stock Exchange, has agreed to promote the research of market strategist Lazlo Birinyi, a novel arrangement designed to attract more order flow to its shop. The decision by Rosenblatt is indicative of the lengths to which floor brokers will go to stay relevant as increased automation threatens their livelihood. Rosenblatt is believed to be the first floor broker to offer research to clients. The firm is also opening an office in Dublin, hoping to gain business in Europe.

Rosenblatt and Birinyi have agreed to cross-market each other's services, said Joe Gawronski, chief operating officer for Rosenblatt. Birinyi is best known for his research on how fund flows can predict market movement. The firms share the commissions generated as a result of the cross-marketing, Gawronski said. "Offering a research product was a natural extension for us and Birinyi is very trade oriented," he said. "Having a research product made sense and this opens up doors in Europe."

Rosenblatt has retained a salesperson in Europe to recommend the broker, RSI Europe, to potential customers once the firm gains approval from Irish regulators. RSI Europe is expected to be up and running early in the second quarter. Initially, the firm will offer execution of U.S. stocks but plans to offer execution of European stocks in the future, Gawronski added.

Rosenblatt has slowly grown from a one-man independent shop, founded by Richard Rosenblatt, to a small full-service broker that also offers program trading and over-the-counter trading. A handful of other independent brokers, such as the Griswold Company, also offer upstairs trading among other services, but the majority of so-called $2 brokers are small family-owned shops that live off orders farmed out by large investors. The future of these brokers is threatened by the move to increase the automation of order execution by all-electronic upstarts and market reforms being considered by regulators.

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