TIAA-CREF Deals With the Recent Development of Liquidity Fragmentation, Which Makes Traders' Jobs Harder

TIAA-CREF
730 3rd Ave.
New York, NY 10024

Assets under management:

$67 billion, which includes mutual fund and institutional assets.

Fund(s) for which you trade:

We subadvise for several of the Dreyfus funds and Dreyfus Founder funds.

Types of products traded:

We trade mainly equities here and have small exposure on the derivatives side through futures and options. We recently expanded our footprint in the alternative investment space through a couple of hedge fund start-ups. We are looking to get more involved in that space. As we expand on the alternative investments side, I would expect our derivatives trading activity to increase as well.

Daily volume in equities:

Typically in our domestic strategies we are trading approximately 7 million shares a day in single-stock and program orders. On the international side, our daily volume is approximately $200 million in principal value.

Structure of trading department:

On the domestic side, we are structured by market cap; we have four traders that handle domestic strategies. I'm typically backing up the domestic side these days. We're organized where a couple of traders handle small- and mid-cap strategies and one handles exclusively large-cap strategies. On the international side, we have five traders. Everything is traded out of Boston. We are structured by region and then by developed or emerging markets.

Previous Positions:

Prior to being named head of the desk I was senior trader of TBC from 1998 to 2000, supporting domestic small- and mid-cap value strategies. Prior to joining TBC, I traded for domestic and international strategies at State Street Research & Management from 1993 to 1997.

Education:

Bachelor's degree in international economics from Georgetown in 1990.

The primary trend we are noticing is the use of client commissions. The SEC's final guidance on section 28E relaxed the standards on the provision of research.

That's enabled better use of commission-sharing arrangements (CSAs). We are taking advantage of that change and the overall regulatory framework by setting up CSAs through many of our larger broker-dealer counterparties, which allows us to separate our execution portion of the commission budget from the research portion of the budget.