Investing October 15, 2002

CSFB/Tremont Hedge Index Ticks Up in September

October 15, 2002 (PLANSPONSOR.com) - The CSFB/Tremont Hedge Fund Index was up slightly in September - the second straight index increase.
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According to Credit Suisse First Boston Tremont Index LLC, the September index bumped up 0.08%, compared to an 0.85% hike in August (See  Hedge Funds Bounce Back in August ).This follows drops of 0.84% in June and 1.35% in July.

Hedge funds outpaced all three broad equity markets. The Dow Jones Industrial Average dropped 12.37%, Nasdaq shed 10.86% while the S&P fell 11% during the month.

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The top performing hedge strategy during September was dedicated short bias with a strong 8.10% increase over the month – following a 1.58% decrease in August and a 21.37% increase year to date.

Next was managed futures, which came in at a 4.11% gain. That follows an August hike of 3.36% and a year-to-date gain of 20.63%, CSFB Tremont reported.  Managers of this strategy invest in listed financial and commodity futures markets and currency markets around the world.

Biggest loser in September was emerging markets which gave up 1.98% over the month, after gaining 1.26% in August.

Year to date, the index is up 0.90%. That compares to a whopping 39.91% loss for Nasdaq, a 28.99% giveback for the S&P 500 and a 24.24% drop for the Dow Jones.

The CSFB Tremont Hedge Fund Index comprises 383 funds as of September 1 and is constructed using the TASS database of over 2,600 hedge funds. In order to qualify for the inclusion in the index selection universe, a fund must have $10 million under management, a 12-month track record, and an audited financial statement.

Investing October 14, 2002

SuperMontage Makes Its Debut

October 14, 2002 (PLANSPONSOR.com) - Today, after months of waiting, the NASDAQ will finally launch live trading with its much-ballyhooed SuperMontage electronic communication network.
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Initially the platform will deal with just five issues, but another 100 are expected to come online in a week.   By December 2, all 4,108 NASDAQ-listed securities are expected to be trading on the system.

After checking the platform Saturday with 47 trading companies — and testing it since July with more than 30 dummy issues — the nation’s second-largest stock market will flip the switch for what it insists will be “an unparalleled view into the activity of the NASDAQ market,” according to its Web site.

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See-Through Source

SuperMontage is both a trading-order display and execution engine. Its technology will offer the fullest look-see available to brokers and traders about the depth of the market and the level of liquidity in the marketplace, according to NASDAQ. The system, which cost some $107 million, can automatically execute orders of up to 999,999 shares and represents a huge step for NASDAQ in what it can collect and how it displays that information (see  Nasdaq Unveils SuperMontage Pricing Plan ).

With SuperMontage, NASDAQ can gather multiple quotes and orders from each market participant on each stock and then turn around and hand that to individual investors, according to CBSMarketWatch. However, in what is likely to be the greatest benefit for institutional investors, the platform will offer a series of new services for price levels and order sizes that will act like a magnifying glass on the fluid workings of the stock market.

Service Stations

The basic service of the highest bid to buy and offer to sell will be augmented with four others that will include aggregate best bid and offer as well as one that carries the top five price levels, helping highlight a stock price’s direction.   A new “super” service, called TotalView, will add listings of the market makers, as well as the size of quotes and orders, in addition to the basic service components.

By NASDAQ’s thinking, the combination of transparency and depth of data on one central order display will help large investors understand how many shares they can trade on NASDAQ without substantially moving the price.

Slow Starts

NASDAQ has been pressing this idea since 1999 to halt flight to alternative trading venues, but kept coming up against ECNs, electronic communication networks, which electronically match stock buyers and sellers. Late last August, the Securities and Exchange Commission finally gave its final regulatory nod to NASDAQ (see  SuperMontage Gets SEC Greenlight ).

However, the SEC required NASDAQ to build an alternative display facility (ADF) to give market participants the choice of displaying quotes and reporting trades without being part of SuperMontage. The ADF does not execute orders.

Launch “Pad”

The SEC ordered ECNS to either link to SuperMontage or certify — in writing — that they would use the ADF as their primary point of access to the NASDAQ Stock Market. Still, ECNs were able to hold off a September launch date until now with petitions.

The five companies that will kick off SuperMontage are:

  • WVS Financial
  • Willamette Valley Vineyards
  • Waste Industries USA
  • Excel Technology
  • Yardville National Bancorp

Twelve more stocks will be added on Thursday and another 88 on October 21. Stocks will be added based on their alphabetical position every Monday after that until December 2.

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