1. Program Trading: An economic perspective Aaron Honig June 22 nd, 2006

2. Program Trading - Definition Electronic trading of a portfolio that represents at least 15 different stocks and over one million dollars in value Inherently minimizes risk Higher efficiency and lower cost, both impact the growth of the economy favorably

3. 1987 Stock Market Crash – Black Monday Initial blame was placed on Program Trading as it was the only variable in the equation that was new Subsequent research suggests that Program Trading was not the culprit, but rather the scapegoat Federal regulations were levied as a result of Program Trading

4. Original Research Part 1 – Determine if Program Trading as a percentage of total NYSE volume was predictable using other market related variables Part 2 – Compare the Program Trading trend line against the Fed Funds rate and the GDP trend lines

5. Part 1 – Regression Analysis

6. Part 2 – Trend Lines

7. Conclusions A higher volume of Program Trading creates economic growth through efficiencies and cost savings. Proposed regulation should be avoided. Program trading as a percentage of the total NYSE increases as Fed Funds rate increases, although total volume decreases.