NYSE 'investigation'

Discussion in 'Order Execution' started by chasinfla, Apr 18, 2003.

  1. Pabst


    A lot of you guys trading listed do nothing more than place orders outside the market hoping/waiting for a specialist to print away and be forced to fill you with him. Then you're the first guys lifting an ECN on the inside to sneak out. What you do for a living is profitable and legal. But from an ethical pov it is questionable and is no more akin to speculating than calling a pawn shop a banker. Many of the listed traders/scalpers are really co-conspirators in the NYSE's monopolistic, anti competative, and dare I say anti capatalistic business model.
    #31     Apr 20, 2003
  2. nitro


    I strongly disagree with this post and the one you posted later [I will take care of that one in a second.]

    The specialist is supposed to match orders at given levels. When there is an imbalance, he can participate in that imbalance along with other traders at some level. ASSUMING that he stays within the confines of those two simple rules, what EXACTLY is conflicting with his "motivating purpose?"

    Are you saying that any human being is simply incapable of acting honestly as a specialist?

    #32     Apr 20, 2003
  3. nitro



    I have no idea what or how you trade, but this is blatanly false. Traders that "sit" outside the B/A are not "unethical" !!!!! It provides liquidity within the bounds of that risk. Let me ask you...What would happen if these traders did not put in their bids and offers there? Where do you think then that a large imbalance would print? EXACTLY, it would print MUCH HIGHER! In fact, whereas the ECN's ARTIFICIALLY pay traders to add liquidity inside/at the B/A and creates stocks that trade 40 to 70 million shares a day and GO NOWHERE as a result, the more natural price discovery on the NYSE has the MARKET pay liquidity providers that fill in the gaps on the NYSE book.

    You seem to think that this is a "put your bid and or offer out there and take the money to the bank." Well, you have never been on the side where you get filled at a tradethrough, and have the stock go against you another .50. Trading outside the B/A spread is in agreement with the risk/reward expentency that one would expect from taking a more defensive stance than those that live inside/at the B/A. In case you didn't notice, these trades don't occur that often, and when they do, you are standing in front of a freight train much of the time!

    To say that it is UNETHICAL is akin to saying that one should not sell on the ask or the buy on the bid! I mean, why not lets make the minimum fluctuation that a stock moves, say 1/100000 of a cent! That way, the market would become more "ethical" in that the cost of getting in would be negligeble? And think about it, now sitting at 1/10000 of a cent above/below the bid/ask would only cost 1/10000 of a penny more! Whooohoooo - who would you sell or buy from ?

    Honestly, you sound like an investor trying to change the rules of made for traders.

    #33     Apr 20, 2003
  4. nitro



    We "debated" the .25 minimum price movement of the ES. There, as here, waving your hands in the air and stating non-sequiters does not move me.

    I am willing to listen WHY you think this is the case, but you have to use more persuasive points.

    #34     Apr 20, 2003
  5. every have a market order knock ur bid 25/50 cents away then goes against u for another dollar?? :)

    being nice get u nowhere in trading
    #35     Apr 21, 2003
  6. Tea


    In the first paragraph you could actually be making the spreads wider by acting as a magnet outside the b/a. That is not how a competitive market should work. The result is that mom and pop will have less in their retirement account compounded over years from higher mutual fund costs because of this artificial gaming. People may not be able to retire because of what you are doing. Not only should you guys be going to confession, but you should be setting up your computers next to the confession box - for easy access. :D

    In the second paragraph, tech stocks are not going anywhere because they are out of favor due to the bubble - not because of ECN's or the Nasdaq system
    #36     Apr 21, 2003
  7. nitro


    What? I wonder if you trade at all?????????

    So I trade so that mom and pop can take my money so therefore they can have more money so they can retire? Let me ask you, on the way out of this trade, ASSUMING YOU ARE LETTING ME HAVE A PROFIT, whose money am I taking from now? WHOOOOOOOOOOOOPS! I better not take my profit, as here I am taking from mom and pop retirement account again!

    Tech stocks are going nowhere because of the bubble????? Dude, PUT UP A QUOTE OF CISCO AND WATCH 70,000,000 SHARES TRADE .01 to .03 cents range for the whole day. Do this for anything other than INTC/AMAT/MSFT. It is amazing any of it moves at all, and the stuff that does move, the entire float of the company ususally turns over in one day - more bubble...Now put up a quote of IBM and see it any of this crap happens.

    #37     Apr 21, 2003
  8. Pabst


    As I would have expected, you rebutted us dissenters with a logical , articulate argument. Like you, I got my start in the futures biz. I trade 99.9% futures and options. Perhaps monthly I shoot some GE. Coming from my bond pit environment, seeing trades in stocks that occur away from the b/a seems....well for lack of a better word, weird. Now I realize price improvement is a better world than just lifting everyone at their price and then printing the balance higher. Also I realize that day traders have added liquidity (much to the chagrin of the specialists), and even thwarted much of their thieving. However I still believe that the natural price discovery of a two sided auction is the best facilitation of trade from both a size and fairness view. I will retract my unethical jab, but as we both know it must be a huge dilemma when trying to think "whats both a fair price for this customer to pay, and yet one that I won't get hurt." We shouldn't have a system dependent on those questions. When stocks were in infancy and needed "promotion" the NYSE and a good specialist were pivotal in bringing new issuance the legitimacy to prosper. But in this new world, where some of the largest cap stocks grew up on dealer boards and now trade on the screen, the NYSE model seems hopefully outdated. As a trader who's interests don't conflict with yours, I have no axe to grind. But just the same I don't see the specialist system lasting too much longer.
    #38     Apr 21, 2003
  9. Tea


    I am referring to your collaboration in causing wider spreads on NYSE stocks than are warranted - not taking the opposite trade from ma & pop's mutual fund.

    I won't continue to argue this point with you - I can tell that all you can see is green moneyman! :D

    And yes, its true, tech stocks are going no where because they are out of favor. There are sectors on the NYSE that are going no where because they are out of favor as well.
    #39     Apr 21, 2003
  10. Babak



    (needless to say...with respect) Please re-read my post. I don't think you've understood precisely what I was saying. :)
    #40     Apr 21, 2003