(6 of 10)
Six miles of fiber-optic and coaxial cables run through the S.I.A.C. complex, which communicates with equally impressive banks of machines at major brokerage houses, as well as with tens of thousands of personal computers, passive desktop terminals, printers and other devices. S.I.A.C. relays information to at least 500 display terminals on the N.Y.S.E. trading floor alone. The exchange computers communicate in five different computer languages, manage almost 1,000 orders a second, and can handle a trading volume of 450 million shares daily, nearly twice the current record.
The major brokerage houses, which are particularly eager to serve customers that deal in large orders of anywhere from 100,000 to 1 million shares, have ultrapowerful computer complexes of their own. At the lower Manhattan trading floor of giant Merrill Lynch, which handled $184 billion worth of securities last year, batteries of IBM computers and a pair of Amdahl supercomputers have been installed to ensure that stock trades take no more than 15 to 20 seconds.
The most eerily advanced computerized operation of all may be nestled away on the twelfth floor of Boston's modernistic concrete-and-glass Federal Reserve Building, headquarters of the Batterymarch Financial Management investment firm. Owner Dean LeBaron has designed his own programs for a brace of Prime mainframe computers that daily spit out a list of several hundred sale or purchase contracts, usually for stocks in batches of 5,000 or 10,000 shares. The list is composed by the computers themselves, based on their general instructions of what and when to buy and sell. Up to 23 specially authorized brokers negotiate with the machines as they trade according to their preprogrammed instructions. Always aware of the latest stock quotations, the computers adjust their own prices accordingly. On average, Batterymarch pays only 2 cents to 3 cents in brokers' commissions per traded share, less than half as much as other major fund managers.
That kind of fast-as-light trading has made immediate information a vital concern. On his morning drive to his office in Manhattan's midtown General ! Motors Building, Howard Stein, chairman of the $35 billion Dreyfus group of mutual funds, stays in minute-by-minute touch with price moves of 72 selected stocks on a QuoTrex sideband FM receiver. The QuoTrex system uses the Security Industry Association's computerized data base, to which all U.S. exchanges report via the Intermarket Trading System.
Increasingly, the big movers and shakers direct their funds not only in and out of U.S. stock markets but abroad. Last year Americans bought additional foreign shares worth $12.8 billion, bringing their total overseas stock ownership to some $41 billion. The number of U.S. mutual funds devoted exclusively to foreign equities has nearly doubled in the past two years, to 43. Foreigners, on the other hand, bought $30.2 billion worth of U.S. stocks last year, bringing their holdings to $126 billion. By last June that total had climbed again, to more than $139 billion.