U.S. Program Trading Experts Recruited

The U.S. unit of Japan’s Nomura Securities Co. has hired some top executives away from U.S. securities houses to launch new products based on computer-driven program trading.

Nomura Securities International has hired Joseph Schmuckler, a specialist in stock index futures who was formerly at Kidder, Peabody & Co. Nomura also has added Michael Berman, who specialized in fixed income futures at Merril Lynch & Co., and Brian McVeigh, formerly of Blackstone Group.

Industry analysts say they are puzzled by the timing. “It’s more a curiosity considering the criticism emanating from Japan relative to program trading,” said Perrin Long of Lipper Analytical Services.

In program trading, developed in the United States, stock speculators quickly trade back and forth between stocks and financial futures contracts, taking advantage of small price discrepancies to lock in profits.

An executive at a large New York firm active in program trading said of the Japanese, “They’re simply playing catch-up, they’re running after a moving train and trying to climb aboard.”

The executive, who requested anonymity, said the Japanese firms may have been upset to find that U.S. firms have gone to Tokyo and begun signing up Japanese clients for program trading strategies.

Regulatory authorities in both the United States and Japan have been looking with concern at program trading. The practice has been blamed for making markets more volatile, contributing to the historic crash of 1987 and last October’s sudden drop.