Is NYSE Price Improvement fair ?

Discussion in 'Order Execution' started by hayman, Sep 10, 2003.

  1. hayman


    I claim it is NOT !

    I trade thin liquidity NYSE issues, and the price-improvement "algorithm" is running rampant these days. More than I have ever seen, and more than what the NYSE website claims (on the order of 40 % or so).

    This so-called "price improvement" that NYSE allows for, provides
    for penny (or more) improvements for those who are already willing to pay the "market" price for a stock, and causes "price
    disimprovement" for those that are posting limit orders, and are
    jumped in front of. This clearly disrupts the laws of supply and
    demand in the marketplace, and diminishes the usefulness of
    placing limit orders into the system. This results in diminished
    confidence in the marketplace by those placing limit orders, which
    will inevitably result in fewer limit order being placed. This will
    ultimately (and has already) diminished the liquidity in the marketplace, IMO. Why does someone who wants to buy at the market in the first place get a price improvement, while those who want to buy a t a limit price, continuously get price disimproved, via unfilled orders ? I just don't get this one........another "feature" of a totally antiquated market (NYSE).

    I truly believe that "price improvement" was devised by Grasso and company, in an attempt to rid the marketplace of Day Traders. What he is forgetting is that Day Traders contribute positively to liquidity, and Specialists are Day Traders, whose # 1 goal is to make money first; regulate the market 2nd (Grasso himself today said that his job of market regulation is only 1/3 of his job......). Enough said !

    Comments appreciated.
  2. we have been down this road so many times already.
  3. lundy


    yes it is fair.

    I received 2 price improvements on limit orders today... 1 for 15 cents another for 8 cents.
  4. Mecro


    WTF are you talking about?

    Get on the right side of the trade and STFU.

    Price improvement rocks. I can put a limit 8 cents away to be safe and make out 20-30 cents sometimes.

    Yeah it sucks when you are on the wrong side but how often does that happen? I mean you are trying to be on the right side, correct?
  5. Tea


  6. dis


    Exactly. The specialist robs Peter to pay Paul, Paul - to pay Peter, and ends up robbing them both.
  7. Simple solution: Don't trade NYSE. Use ECNs or trade Nasdaq. I've traded on NYSE only a few times, and each time, the fills were horrible.

  8. Zinger! That's a good one.

    Of course, I agree with Mecro, if you can't get on the right side of price improvement, maybe you should not trade.
  9. lundy


    stop complaining, instead figure out a way to profit in the current market, or switch markets, or jump out the window :D
  10. I know this will be unpopular, and I admit I often try to get price inmprovement, but I've never considered it fair. If both sides are willing to deal at one price, why should the spec be able to favor one over the other just because he has a different agenda? I don't claim to understand all the wrinkles in it, but the Nasdaq/ecn model seems fairer to me.
    #10     Sep 13, 2003