Buy-side Perspectives Issue 6 | Page 10

AMERICA AT THE CROSSROADS Patrick Connors, head of outsourced trading, Weeden Prime Services T he US stock market is in deep trouble, hurt by a declining small-cap market and the global shift towards passive investing. A look under the hood of the market reveals some deeply worrying structural flaws, according to Patrick Connors, head of outsourced trading at Weeden Prime Services, based in Greenwich, Connecticut, USA. 10 Fifteen years ago, Connors co-founded Greenwich Prime Trading with Eric Savitz. At the time, they were pioneers of outsourced trading. The idea was that smaller asset management companies could outsource their trading, thus replacing a fixed cost with a more scalable one. In September 2016, both Connors and Savitz joined Weeden Prime Services to run an outsource trading desk (which the firm www.buysideintel.com previously didn’t have). Weeden Prime itself mainly serves hedge funds and family offices in the US. “Small-cap stocks are being killed off by the separation of commission payments for research and execution,” said Connors. “Brokers are reluctant to make markets in small stocks because it’s no longer economically viable. Small caps are being cut out from the market.” October 2016