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Niederauer, For One, Welcomes Our New Robotic Masters

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Word hit last night that the New York Stock Exchange would as of right now be a wholly-owned subsidiary of Goldman Sachs and specialists would be scheduled for immediate extermination.
That, at least, was the reaction coming from a couple of specialists we spoke to today about the news that Goldman Sachs managing partner Duncan Niederauer had been named president and co-chief operating officer of the NYSE. He joins former Goldman president John Thain at the top of the exchange, and becomes Thain's most likely successor as chief executive of the exchange.
But what really had tongues wagging on the trading floors was Niederauer's enthusiasm for electronic trading, and possibly for eliminating floor specialists all together. Niederauer was the head of electronic trading at Goldman and was instrumental in arranging the NYSE merger with the electronic trading platform Archipelago, a move that many still see as the beginning of the end of the role of specialists on the trading floor. Prior to the merger, Niederauer sat on the board of directors of Archipelago.
As long as seven years ago, Niederauer was describing the situation of floor traders handling order flows as "an unsustainable model."
On CNBC this afternoon, Charlies Gasparino described Niederauer as "one of the biggest advocates in electronic trading." Gasparino also provided this bit of colorful background:
"This guy was advocating the replacement of the specialists with a computer because he basically thought specialists were inefficient and possible fraudulent. One time he said something along these lines to a high-ranking person at the New York Stock Exchange, "I don't want five guys named Vinnie executiving my trades."
This remark led then NYSE head Dick Grasso to treat Niederauer as an enemy of the stock exchange according to Gasparino, who described Grasso's reaction as pronouncing Niederauer dead. Well, as they say, it seems as if stories of Niederauer's death have been greatly exaggerated.
Gasparino also added that a move to completely electronic trading might not wait a few years from now when Niederauer might become the chief of the exchange.
"I think it's going to be a lot sooner," Gasparino said. "A lot of people on the floor are telling me it's a lot sooner than two years. It's possibly a year or a lot or even sooner than that."

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