1 Several of the New York Stock Exchange's own listed companies, led by giant Contel Corp., are joining for the first time to complain about program trading and the exchange's role in it.
2 Claiming program trading has turned the Big Board into a 'gambling casino,' Contel Chairman Charles Wohlstetter said that he and at least 20 other corporate executives are forming an unprecedented alliance.
3 The group, Mr. Wohlstetter said in an interview, wants to end the market's wild price swings that critics blame on computer-aided program-trading strategies.
4 The group will complain to Washington, to the heads of program-trading firms and to the heads of the Big Board itself, he said.
5 'They should call {the exchange} Trump East,' charged Mr. Wohlstetter, the 79-year-old founder of Contel who's also a former investment banker and stock trader. 'What is the mission of the financial community -- to help some scavengers or schemers, or help corporate America?' Contel is a $6 billion telephone and electronics company.
6 Pressure has been building on the Big Board in the past two weeks to do something about market volatility, which many investors say is caused by program trading.
7 The market's Friday-the-13th plunge of 190 points in the Dow Jones Industrial Average, and the Big Board's understated response to it, galvanized some longstanding dissatisfaction among companies listed on the exchange.
8 Last month, program trading accounted for a record 13.8% of average daily Big Board volume.
9 Mr. Wohlstetter, for example, said he wrote to Big Board Chairman John J. Phelan Jr. about program trading after the 190-point Dow plunge, and as in previous queries, 'what I get back is gobbledygook.' He said he's upset that Mr. Phelan, trying to calm investors after the plunge, said that investors would simply have to get used to the market's big price swings.
10 The Big Board 'is partly to blame {for the price swings}, because they're cowards,' said Mr. Wohlstetter. 'Their powerful members manage them.'
11 The focus of the outcry has been stock-index arbitrage, which accounts for about half the program trading that goes on.
12 Index arbitragers argue that their trading is healthy because it links markets, but critics say such trading accelerates market movements and increases the chance for a crash.
13 The Big Board has refused to be drawn into a public debate about program trading.
14 Richard Grasso, Big Board president, last week said only that the exchange is concerned about all its constituents.
15 Privately, exchange officials worry that without a hospitable system for program trading at the Big Board, billions of dollars in trading will simply migrate to overseas exchanges such as London's.
16 It is partly for this reason that the exchange last week began trading in its own stock 'basket' product that allows big investors to buy or sell all 500 stocks in the Standard & Poor's index in a single trade.
17 One intended customer of the new basket product is index arbitragers, according to the exchange.
18 Investors have complained for some time about program trading, particularly index arbitrage, to little avail.
19 But according to some Big Board traders, an organized campaign from exchange-listed companies might make the exchange finally consider big changes. 'They won't fight the listed companies.
20 Now the assault is on,' said one top trader.
21 The Big Board can't ban stock-index futures, of course, but it could ban use of its high-speed electronic trading system for program trading or at least encourage securities firms to back off.
22 The exchange put a bit of a damper on program trading when, last year, it simply started to publish monthly statistics of each firm's program-trading volume.
23 Contel's Mr. Wohlstetter said the group of Big Board companies isn't ready to go public yet with its effort, and that he doesn't plan to be the leader once it is public.
24 However, he said he planned to spend the weekend making calls to gather additional support.
25 Among those Mr. Wohlstetter said he has been talking to are Sanford Weill of Primerica Corp., which is the parent of Smith Barney, Harris Upham & Co.; GTE Corp. 's James Johnson, and ITT Corp. 's Rand Araskog.
26 None of these chief executives were available for comment.
27 Among the targets of the Big Board companies' campaign will be some corporate pension funds that use program-trading strategies to maximize returns on their investments.
28 For Contel's part, the company a month ago informed each of its money managers that it would drop them if they give business to program-trading firms.
29 It was just those kinds of ultimatums that last week succeeded in turning up the heat in the debate.
30 Kemper Corp. 's Kemper Financial Services unit said it cut off Bear Stearns, Morgan Stanley, Oppenheimer and General Electric Co. 's Kidder, Peabody & Co. unit.
31 All of the firms except Kidder, which is the second-biggest program trader on Wall Street, quickly announced pull-backs from index arbitrage.
32 Kidder officials stand by their aggressive use of program trading.
33 Chief Executive Officer Michael Carpenter said that despite the outcry even by some of Kidder's own brokers, he believes index arbitrage doesn't have a 'negative impact on the market as a whole.' However, pressure on Kidder's parent, GE, could change Kidder's policy.
34 GE Chairman John Welch has been 'besieged with phone calls' complaining about his unit's program trading, according to a person close to him.

" They should call { the exchange } Trump East , " charged Mr . Wohlstetter , the 79 - year - old founder of Contel who ' s also a former investment banker and stock trader . " What is the mission of the financial community - - to help some scavengers or schemers , or help corporate America ? " Contel is a $ 6 billion telephone and electronics company .
Trump East , "
what does trump east mean?