NATION : Firms Change Trading Methods
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NEW YORK — Amid mounting pressure from investors, two major Wall Street firms said today they are abandoning or curtailing a computerized trading strategy widely blamed for turmoil in the stock market.
Bear, Stearns & Co. said it will stop using the program trading strategy known as index arbitrage to trade for its own account, and PaineWebber Group Inc. ended its use of all forms of the strategy.
Also, Goldman Sachs & Co. asked the New York Stock Exchange to place new limits on index arbitrage, while Dean Witter Reynolds Inc.--which abandoned the strategy earlier this year--sent a letter sharply critical of the practice to more than 2 million clients.
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