Junius Peake, Early Advocate of Electronic Securities Trading, Dies at 80
Junius Peake, who poked and prodded the finance industry as one of the earliest, most persistent proponents of electronic trading, has died. He was 80.
He died on Jan. 27 in hospice care at Northern Colorado Medical Center in Greeley, Colorado, said his son, Andrew. He suffered a series of strokes over the past few years, following his retirement in 2006 as professor of finance at the Monfort College of Business, part of the University of Northern Colorado in Greeley.
Peake, known as Jay, had a front-row view as Wall Street firms were inundated by paper during what became known as the back-office crisis of the late 1960s. As partner in charge of operations at the Manhattan brokerage firm Shields & Co., he oversaw the use of a $500,000 computer system the firm purchased in 1964 from National Cash Register Co., now known as NCR Corp.
The computer, which some employees called “the monster,” calmed the frenzy of settlement days, the New York Times reported in a 1965 article. “Our overtime has been minimal recently,” Peake told the Times.
The back-office experience shaped Peake’s view that buying and selling by shouting on trading floors such as the New York Stock Exchange “was no longer viable in the modern world and that it was essential to move to automated trading,” he wrote in a four-page summary of his career. “This was a change in which I passionately believed, and I began to express my opinions and suggestions for change in many articles and papers, which led to me being asked to testify at various congressional hearings.”
Rethinking the Exchange
Peake teamed up with two like-minded financial thinkers -- Morris Mendelson, a professor of finance at the University of Pennsylvania’s Wharton School, and R.T. Williams Jr., a computer expert -- to devise an electronic stock exchange, presenting their idea to the Securities and Exchange Commission in 1975.
“We wrote the SEC proposal in less than two weeks,” Peake told the Philadelphia Inquirer in 2008. “Some Luddites argued we were going to kill the NYSE, put many specialists out of business, and ruin the U.S. financial system. They thought we were the devil incarnate.”
The three men refined their idea and publicized it in papers published in 1976 and 1979. Their 1976 proposal was contained in a 50-page report to the SEC entitled “National Book System: An Electronically Assisted Auction Market.”
It envisioned a single, electronic national stock market, with up-to-the-minute bids and offers available for all brokers and customers to see on computer screens.
The plan also called for quoting prices in decimals, doing away with the one-eighth increments that had long defined Wall Street math. “This would make the markets better because decimalization would create genuine price competition for securities,” Peake wrote. “However, this was resisted, as the market preferred the nice wide spreads, which trading in fractions brings.”
Fractions would remain in place until 2000, when stock exchanges moved to the dollars-and-cents pricing that Peake and others had called for.
In 1981, Peake and Eugene M. Grummer, a former senior vice president at Merrill Lynch International, announced plans to open the first electronic trading system for futures contracts, the International Futures Exchange, or Intex, based in Bermuda. They promised to provide “the most advanced computer technology” to as many as 600 members who would order contracts for future delivery on terminals in their offices, according to a news release they issued at the time.
‘Before Its Time’
The exchange opened in 1984, two years behind schedule, with Grummer as chairman. It didn’t attract much business and lasted only a few years. “It was a great idea before its time,” Andrew Peake, 51, a money manager at Morgan Stanley’s private wealth management group in New York, said yesterday in an interview.
He said his father “never patented his ideas, never got rich from all this. He’s one of the few guys on Wall Street who wasn’t rich after being at it as long as he was. He just knew that after a while the world would come around to his ideas.”
Junius Wentworth Peake was born on Feb. 12, 1931, in New York City, where he attended choir school at the Cathedral Church of Saint John the Divine. He left Syracuse University after just one year to work on Wall Street to help support his family, after his father suffered a stroke.
Before joining Shields he worked at Garvin Bantel & Co. starting in 1950. His first assignment, he said, was changing the ink on the ticker machine. He observed that trading in those days “was tilted in favor of the people who ran the trading venues, whereas it seemed to me that the markets should serve the needs of their customers,” he wrote.
He had two sons, Andrew and James, with his first wife, Jean. That marriage ended in divorce. Survivors include his second wife, Diane Ryerson-Peake.
Before and after his move to academia, he was outspoken about the inevitability of electronic trading and the need for the U.S. to stop resisting it.
“I’m scared we’re going to blow it as a country and lose our capital markets,” he told Newsday in 1988.
When the NYSE announced in 2005 that it would merge with electronic trading operator Archipelago, Peake scoffed at the pledge by John Thain, then the exchange’s chief executive, that a “hybrid” of floor and electronic trading would be preserved.
“It is the end of the floor,” he told the Times, “in spite of what John Thain says.”
In the career summary he composed in his later years, Peake wrote that it was “satisfying to see so many of my ideas implemented in today’s markets -- perhaps especially because they were so widely derided when first suggested.”
He titled his composition, “A Career on The Street: From Heretic to Sage.”
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