how to change the specialist system

Discussion in 'Trading' started by ryanmitcho, Apr 23, 2003.

  1. there has been a lot of debate lately on how the specialist system is flawed and how there are alot of unfair practices going on, such as front running and profiting off of opposing mkt orders by specialists and it is good to see some of them finally getting busted for their crooked ways. one would think that since some specialists are going to the can, it would be an impetus for others to reform, but it still seems some crooked sh*t goes down.

    for instance, yesterday I was trading AIG and tried to NX an offer of 25,000 shares that he showed in a fast market. I was not filled and watched the time and sales to see if the 25K actually printed. it didnt. only a few thousand. what happened is the specialist took the shares for himself by freezing the book with 1x1 and keeping them, then gapped his market, printed up 20 cents and I saw 20K shares executed at the higher print- he obviously took most of the avaiable shares for himself, then printed probably a token customer order for 5K shares, then 15K of his stock up 20 cents for a quick $3000 gain. the remaining shares he probably pared out as the stock went higher. pretty shady.....

    what I would like to see is not the elimination of the specialist system altogether in favor of a ECN market- the NYSE is still the best exchange to trade, but it definitely has its drawbacks. A few changes I think should be institued (but dont know if they ever will be) are:

    raising the NX limit from 1099 shares to at least 2000-3000

    prohibiting going 1x1 to disable NX and not provide liquidity when there is size over say 8K available to be traded within 7 cents of the inside mkt- that one has room to be modified/ changed.....

    not being able to go 1x1 ahead of large size orders to protect them, let people buy it/ hit the bid- let the size trade.

    having a time limit to open a stock after the NYSE market open of 5 minutes or 9:35 am- too many times I have watched specialists delay openings with no news in their stocks to guage mkt direction/ demand, then change their indications.

    have a time limit of maybe 30 seconds to make a trade, no more freezing the book for a few minutes, especially in volatile markets.

    not being able to hold cancels and fill you when you really don't want the stock anymore- they can hold your order max 1 minute.

    disallowing scalping of opposing mkt orders for the specialists benefit.

    eliminating the cleanup screw prints that happen at the close- they must print within 5 cents of what the inside mkt is right before the close-

    basically I am looking for them not being able to screw traders as bad as they have been recently, would be nice to see some changes, but who knows?? in a perfect world they would also lower our damn SEC fees too! but if they actually will use this excess revenue from the fee increase to reform the specialist system and make it more profitable to trade, that is worth whatever we are paying now for it. put my hard earned money to work for ME, SEC.

    and I am looking forward to getting the liquidity quote.....
  2. Anyway you look at it, its an antiquated system. We've known that for years now. At this point its anyone's guess if or when they will change. Either way, I do suspect some 'funny money' at work at the NYSE. Having said that, the NASDAQ isn't perfect either but it sure beats the one specialst MO.

    All the more reason to trade futures.

    Just a thought,

  3. BSAM


    Trade Nasdaq.:cool:

  4. No, thanks, tried that before and I much prefer the NYSE and the specialist system. but it COULD be better.....:D
    I just started this thread to hear other views on what would make the system better.....
  5. Mecro


    Out of curiousity

    Didn't any of you read Richard Ney?

    NYSE should go ECN.
  6. No way. Compared to the NYSE I find the nasdaq far more frustrating and annoying, and I trade both constantly, although nothing beats the NYSE for intraday. I usually only take overnight positions in the nasdaq.

    Ever have some dipshit lock the market?? That doesn't happen with the NYSE. Ever have some piker with a 3rd decimal or hidden order on the NYSE? Nope.

    There is also no liability with the nasdaq, and no chance of price improvement.

    The nasdaq is a flea market, whereas the NYSE is a gypsy carnival. Both have advantages for big money.

    Whining about the NYSE is pointless. There is a good reason why it has been around 200+ years and will be around when everyone gets tired of whining...
  7. if he did actually "take" those shares for himself, it would've constituted a trade, and it would've printed. what you probably saw was a seller who yanked his offer and then sold higher...
  8. white17


    Did anyone see the statement made by LaBranche the other day? He actually had the nerve to say that the specialist system was there to protect the small investor.
  9. You can always ask the casino organisers to make the game for you to win :D. The ones they catched must have been some competitors they wanted to eliminate :)

  10. its just wishful thinking........not complaining....however the system works, i will still trade it and profit. :D
    #10     Apr 24, 2003