The NYSE couldn't handle the selling on Tuesday and that was just a 3% drop. The Hybrid is broken. The specialists don't take positions anymore. One or two Arca programs probably have more capital behind them than do the specialist anymore in some names. (Sidenote, Cramer needs alot of help with his NYX. He down 20 smackers. NYX is the best short in the market as the NYSE doesn't even work and the specialists might be all leaving). Imagine the panic the media would cause if we fall 6% Friday and the headlines over the weekend are that the NYSE had to shut down because of too many sell orders. Black Monday. Why not. This may be worst residential collapse in the history of the country. Not to mention all the other fictional wealth present in the U.S. economy. The house of cards just has too many cards. Oh yeah, we have killed 100,000's in the middle east and potentially bred millions of future terrorists and America haters. If they don't hit us on Monday, its only a matter of time until they do.
I write this mostly in jest. But the NYSE does seem to have problems and it really could destabilize the markets if it is the mechanics of NYSE Hybrid trading and lack of specialists that is causing volatility to get out of control and people lose faith in an orderly market. That would add an entirely new layer of risk.
Why all the delays at the NYSE? Does the hybrid system produce more ticks/trades than the manual floor system?
Why exactly do free markets need to be "stabilized"? I idea that Specialists once took big losses to "stabilize" NYSE stocks is a Myth. Just let prices go where they will.
silk. If the NYSE is broken due to the absence of specialists, why is the Nasdaq not broken as well since there are no specialists in the stocks -just countless eyeballs trading them? For that matter -the eminis and other futures contracts where no specialists exist? Just individuals who acting on their selfish intentions create a market that has been orderly save for a few instances throughout history?
Excellent Commentary.................... The idea of direct access which ARCA focused on with respect to the Nasdaq market....gave an individual the ability to post between the bid ask by simply entering via the ARCA mechanism.... The specialist system on the NYSE starts with the premise of not having a system of marketmakers.....but assigned personel ... Today...the ECNs and the marketmakers coexist...the marketmakers still having some tools that direct access players do not have...such as more leverage...and short sale ease... However...the change regarding the relation of the NYSE...which in effect is altering the relationship of order entry between the nonexchange and exchange members...calls for less response time...and not much else... It is not clear as to why the market should not be on its own via a purely electronic marketplace...the reason being supposed less volatility because of specialist intervention... ........................................................................................... No one gives away money on either exchange....and the bottom line is that all shackles should be removed...and the pure electronic marketplace should be implemented...not just for the US markets...but for the reason of defragmentation of the worlds markets... There will always be specialized groups risking within their niches... The delivery of trade execution should be like making a phone call....reliable and inexpensive...Vendors will have to further justify their take as in any other business...and should not be legally subsidized at the publics expense... ................................................................................................. What was clear during the NYSE mishap...is that the Nasdaq performed as expected...whereas the NYSE did not...........
What probably did not work as well as it was suppose to be were the OMS Middleware systems that cancel and route out to the regionals in response to Reg NMS compliance. These systems need more work since they were implemented hastily and probably underwent "stress test lite" due to deadlines.
Why? "NATIONAL SECURITY" of course - what a joke. Reminds me of the ludicrous quote Bush made soon after September 11th - "Americans deserve a higher stockmarket" Can anyone tell me why they deserve higher stock prices because I cannot work this out?