Difficult Question List

Discussion in 'Order Execution' started by gerund, Mar 7, 2004.

  1. gerund


    I have read all major threads over the from the "Order Execution" section of this website.

    Below is a list of questions that are not directly addressed. I would greatly appreciate the strongest contiributors on this website to make an attempt to answer the following questions:

    1. What is effect of the current Direct+ on NYSE specialists (ie; negative or no affect)? As the NYSE evolves to the SEC's "fast" market status, how will a greatly expanded Direct+ affect a specialist's participation % (ability to act as principal in trades) and realization % (ability to make a profit from trades acting as principal)? In other words, what type of order flow do specialists make money on?

    - Specialists last week stated that the potential changes will enhance their businesses via increased volume from NYSE order flow market share gains. Overly optimistic or correct?

    2. How is the trade-through rule not breached when an "upstairs" (ie; internal cross or firm to firm cross) trade is made off the NBBO?

    Recently learned that POSIT's and INGP's (via brokerage segment) intra-day NYSE listed cross prices are not subject to trade-through rule if they have less than a 5% share of the ticker's volume in the past 6 months.

    3. If "opt-out" proposal is implemented, how much order flow goes "upstairs", away from the specialist's flow?

    Fidelity, American Century, CalPERS, etc against the trade through and would likely opt out...

    4. If certain rules (ie; trade-through) are changed, why would ALL trading not completely shift from principal based specialists and market makers to ECNs on mid to high liquid stocks?
    In other words, what function do the MM & specialist do better than the ECN in mid to high liquid stocks? What part of their business is defendable against the inevitable attack from the ECNs?

    5. Technically speaking, how does program trading adversely affect a MM or specialists' abilty to be profitable? (still not clear after reading "Limited Life of Market Maker" thread)

    Thank you for your responses.