Article on Market Maker

harrytrader · May 30, 2004

http://www.sdimc.org/en/2002/07/1943.shtml

"One of the most important rules of The New York Stock Exchange and Nasdaq, which helps the market maker make huge amonts of money, is that when a company has an important news announcement to make that will seriously affect the price of the stock, the company must tell the important news to the market maker {"specialist"} about 30 days in advance of releasing the news to the general public. .This is supposedly done to allow the market maker keep an "orderly" market in the stock he trade...

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Pabst · May 30, 2004

The Ney book that's the basis for that article was published in the 1960's! Rules and Regs have changed dramaticly since. Not to mention the trading landscape. Back then few funds, no futures related programs, 1/8 commissions, no ECN's, no prop guys banding orders. SO apples and oranges!!

Corso482 · May 30, 2004

The author said that if you want to place a big trade, e.g. 1mm shares, you have to notify the market maker in advance. Is this still true?

Grob109 · May 30, 2004

Quote from Corso482:

The author said that if you want to place a big trade, e.g. 1mm shares, you have to notify the market maker in advance. Is this still true?

As I remember it it is a one way street.

"Principals" are subject to a set of rules that require them to give notice. You broker, if you are an independent (I was), shares part of he responsibility for this. I ran into a rule related to the % of the float or authorized.

It is definitely a drag.

On the other side of the coin, you get special attention of the other owners and also the staff (employees). I liked being able to know how research and sales approaches were being dealt with. This stuff sets the timing for cup and handle type price moves on an IT basis. It is related to parking money and not having to watch it as a trader.

stock777 · May 30, 2004

I thought it was 60 days notice, and a free Dunkin Donut with every market moving item.

30 days is hardly enough time to get on the right side of the move.

Mecro · May 31, 2004

Quote from Pabst:

The Ney book that's the basis for that article was published in the 1960's! Rules and Regs have changed dramaticly since. Not to mention the trading landscape. Back then few funds, no futures related programs, 1/8 commissions, no ECN's, no prop guys banding orders. SO apples and oranges!!

Uhm, not much has changed. Specialists still receive a boatload of inside info, front run orders and move price levels for humongous profits at the cost of mom & pop. Now with day traders, we have pennying, held orders, and order execution abuse.

Pabst · May 31, 2004

Quote from Mecro:

Uhm, not much has changed. Specialists still receive a boatload of inside info, front run orders and move price levels for humongous profits at the cost of mom & pop. Now with day traders, we have pennying, held orders, and order execution abuse.

Do you have any idea how much more profitable specialists were in the 1960's compared to present? Not even close. Specialists today are salaried hacks working for big (only five left) firms. A generation ago individual specialists were making a million a year at a time when NOBODY was making that kind of dough.

Don Bright · May 31, 2004

Quote from harrytrader:

http://www.sdimc.org/en/2002/07/1943.shtml

"One of the most important rules of The New York Stock Exchange and Nasdaq, which helps the market maker make huge amonts of money, is that when a company has an important news announcement to make that will seriously affect the price of the stock, the company must tell the important news to the market maker {"specialist"} about 30 days in advance of releasing the news to the general public. .This is supposedly done to allow the market maker keep an "orderly" market in the stock he trade... "

Wow, and just when I thought we couldn't find Hoffa, Kennedy's assasin, and Area 51 (near my house by the way)...Thank You for giving me something to devote a couple of articles to...LMAO.

Old (2002) "after crash paranoia"..... I hope you guys don't believe this nonsense...

Don

Don

Don Bright · May 31, 2004

Quote from Pabst:

Do you have any idea how much more profitable specialists were in the 1960's compared to present? Not even close. Specialists today are salaried hacks working for big (only five left) firms. A generation ago individual specialists were making a million a year at a time when NOBODY was making that kind of dough.

I certainly wouldn't use the word "hacks" --- but some of what you say is absolutely true....Corporate management, not "cowboys" making money for themselves.... I have heard them say "If Only!!" (have a big effect on the the markets)...

Don

Don Bright · May 31, 2004

Since we're going down memory lane...let's revisit another article, by a reputable publication (The Wall Street Journal)..and see a bit about the people on the OTC side that some here want to defend...

They actually brag about front running their own customers... Yes, the MM's...."can you believe it?"
+++++++++++Excerpt++++++++++++++++++++++
But, he complains, the people at Knight are "taking information about retail customers' intentions to trade and using that information to improve their own proprietary trading profit, at the expense of their customers and of other participants in the market."

+++++++++++++++++++++++++++++++++++++++

http://www.stocktrading.com/wsjknight1.shtml

I don't want "bad guys" on either side of any trade that takes place...we want/need the ability to see what is real, and learn how to read it (the information, the tape), correctly.

Don