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Floor traders have been talking about what Peter Giacchi, a designated market maker (DMM) for GETCO, did last week. Business Insider has learned that Giacchi was the DMM who saved the day before market close last Friday when he identified and stopped an erroneous order from occurring thereby preventing a broker-dealer from losing millions of dollars.
Here’s how it happened, according to the Reuters report.
At 3:59:59 p.m. Eastern time on Friday, a broker-dealer placed an order for 17 million shares of Monster Worldwide, which was trading at $8.50 a share, with no offers in site.
Typically, when an order comes in at the close, NYSE has a procedure to go out and solicit contra-side interests to fill the order, but given the thin book for Monster Worldwide, something smelled off this time, said Pastina.
The DMM saw it, alerted the operations staff, the stock was halted, and the broker-dealer was contacted. It turned out the broker-dealer did not want to buy Monster Worldwide. Rather, it was looking to buy an unspecified amount of Monster Beverage Corp, the Sara Lee coffee and tea spinoff that was a new entrant to the S&P 500.
We were able to speak with Giacchi over the phone Monday after the closing bell.
Giacchi, who started his career at the American Stock Exchange before moving to the Big Board in 1996, said there were two obvious standouts when this order came across causing him to alert operations that this was an erroneous order.
The first, he explained, was the size of the order. The second was that there wasn’t a news event associated with the stock.
“The size of the order and no news event and something wasn’t quite right. The customer needed to be contacted,” he said.
Since this was brought to our attention by an anonymous floor trader, we asked Giacchi about what the reaction has been like amongst his peers.
He told us no one bought him doughnuts or drinks or anything like that.
However, Tom Facchine, a senior leader at the DMM unit at GETCO and NYSE executive board governor, told us that Giacchi did a great job.
“Pete did a fantastic job. If anyone is going to buy him a doughnut, I will,” Facchine said, adding, “It’s really a process that we’ve done for years. Ultimately, the market was served well and that was the most important thing.”
A NYSE floor trader from a different firm, who spoke only on the condition of anonymity, told Business Insider earlier that this shows another reason why their model–which combines human judgment with computerized trading–is more efficient.
“I think some of the feedback from our peers on the floor is obviously that the market structure that the New York Stock Exchange has in place is very effective,” he said. “I think people were happy to see that. I think in this circumstance, the New York Stock Exchange model worked very well.”
In our phone conversation, we also learned that Giacchi wanted to work on Wall Street from a very young age.
Growing up in Brooklyn, Giacchi was exposed to Wall Street early on. His father was a barber on Wall Street and his mother was a broker.
He told Business Insider he knew he wanted to work on Wall Street from the first time his mother took him to the lunch club at the New York Stock Exchange.
“It has been an actual dream to work in this job. It’s a dream come true. I’m very fortunate to have this job,” he said.
After he graduated from Santa Clara University in California in 1992 he came back to New York that summer to work at the American Stock Exchange as a specialist.
In 1996, he jumped to the NYSE to work for a small family firm as a DMM which eventually became Fleet Bank, then BAML, which was acquired by GETCO.
Both of his parents now live in Florida. He currently resides in New Jersey.
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