Specialists scrapping for every penny

Discussion in 'Wall St. News' started by cashonly, May 26, 2004.

  1. cashonly

    cashonly Bright Trading, LLC

    You know the specialists are really scrambling when they do something like this:

    The Securities and Exchange Commission has approved a New York Stock Exchange proposal to change the way odd-lot orders are priced and executed systemically. Before the change, odd–lot orders did not enter the NYSE’s auction market were executed systemically, wit the specialist being assigned as the contra-party in all cases. Now, odd-lot orders will be priced and executive at the price of subsequent round-lot transactions, in a proportion to round-lot volumes. www.sec.gov/rules/sro/nyse/34-49745.pdf


    It negatively affects the smallest of investors who don't have a leg to stand on.

    Notice to mothers: If you're taking your baby on a stroll by the NYSE, make sure that they hold on to their candy tight!

    Sorry, it just seemed really petty to me.
  2. Specialists went crazy recently, robbing every penny they can. Overall, Markets are doing well, of course not really well !

    However, at the same time, specialists stocks (see LAB, VDM) are at all time lows,
    which means 5 - 10 year lows.

    I see this as a strong sign that we might see an electronic NYSE (ECN) soon.
  3. the last person in the world worried about a penny or two is a "small investor." Unless, of course, he's bundling odd-lot orders -- but he would be a trader, in that case.
  4. Cant speak for LAB, but VDM shares are priced fucking low mostly due to bad financial results (less volume, less volatility, hurts both the specialist & trading activities).

    Stockprice/Earnings is about the same as the high years... (~10)

  5. lescor


    That odd lot rule was a massive loop hole for someone who knew how to exploit it and wanted to take the risk of getting their pee-pee slapped.

    Picture this. News hits a stock and the specialist freezes the book 1x1. Meanwhile ecn bids are stacking up and are crossed 50 cents higher than the nyse offer. You could fire off odd lot market buy orders and get the price the specialist was showing with the one lot and be selling the shares to the ecn's just as fast. You could get filled 99 shares at a time as fast as you could hit the button.

    I tried it and it worked, but didn't want to get fined, so I didn't mess around with it. I imagine some specialists got reamed (for a change) once in a while.
  6. It ticks me off when the specialist trades through my ask. It happened to me again today. The stock was trading a penny above my offer and the ask was showing 2 cents above that. It was if my ask did not exist. Needless to say I never got hit and it started trading down after that.

  7. Dustin


    The retail guys with access to an API are kicking themselves after reading this. Nice find!

  8. Arbie


    how long will this actually take to be implemented? anyone has any idea?
  9. Scum bags like yourself are the reason they are making that change, right?

    In the end, only one it is hurting is the general public because of scumbags like yourself, right?

    So, blame yourself for the change. It was meant for retail order flow, not traders trading 99 shares.

    How pathetic. Maybe you should learn to trade round lots, like 1000 shares instead of odd lots. :)

  10. B1010


    why did most specialist firms incur huge fines?.. They must be scumbags too....
    #10     May 26, 2004