How much does a specialist make??
- Thread starter jpomerenke
- Start date
first of all , why are you so angry????
secondly, there is a big reason they can't.....It's called regulation.
If you execute a certain amount of the daily volume of any security you have to register with an SRO as a Market Maker...I once worked at firm where two traders bought so much of an issue that the regulators called up and said we would have to register as a market maker.....Once you are forced to register, you now have liability...best price, price improvement, mark up and down restrictions, filings, net cap requirements, ....and that's just the tip of the ice berg.......
now calm down
secondly, there is a big reason they can't.....It's called regulation.
If you execute a certain amount of the daily volume of any security you have to register with an SRO as a Market Maker...I once worked at firm where two traders bought so much of an issue that the regulators called up and said we would have to register as a market maker.....Once you are forced to register, you now have liability...best price, price improvement, mark up and down restrictions, filings, net cap requirements, ....and that's just the tip of the ice berg.......
now calm down
over inflated and irrational buying and selling ?
Look at what happened to NASDQ in the late 90's and today and you can't tell me it isn't better for the individual investor to trade NYSE....It sucks for the day trader, granted, but for longer term investors it's been pretty successful....On thing that is usually left out about a specialist on the floor ( and i omitted this too) is the fact he has to make a market....If somebody want to buy AOL at no more than 12.50 and somebody wants to sell AOL at no less then 12.75....guess who's required to make it happen in the middle? The specialist...Try making a NAZ market maker do that!!!
The are to blame for a lot of the problems....lie when you put in an order for 1000 shares of a stock and they execute you in 100 share lots.....it's gotten better with supersoes, but Its still done alot. On the NYSE a specialist tends (not always) to get the order done.
Look at what happened to NASDQ in the late 90's and today and you can't tell me it isn't better for the individual investor to trade NYSE....It sucks for the day trader, granted, but for longer term investors it's been pretty successful....On thing that is usually left out about a specialist on the floor ( and i omitted this too) is the fact he has to make a market....If somebody want to buy AOL at no more than 12.50 and somebody wants to sell AOL at no less then 12.75....guess who's required to make it happen in the middle? The specialist...Try making a NAZ market maker do that!!!
The are to blame for a lot of the problems....lie when you put in an order for 1000 shares of a stock and they execute you in 100 share lots.....it's gotten better with supersoes, but Its still done alot. On the NYSE a specialist tends (not always) to get the order done.
true...now think about how the declines happened?
overnight like WCOM? there was ample opportunity to get out of all....and they are still AROUND for the most part....i read recently that 30% of the nasdaq 100 from 1998 are no longer in business
and that they had to redo the listing requirements for NMS or they would lose another 25% of the companies...Im not saying it's perfect, but look at the NAZ carnage? It's not just the companies, it's also the market making/ecn free for all that allows perfectly legit companies to be pounded into submission by certain players whole are supposed to be "keeping an orderly market"
overnight like WCOM? there was ample opportunity to get out of all....and they are still AROUND for the most part....i read recently that 30% of the nasdaq 100 from 1998 are no longer in business
and that they had to redo the listing requirements for NMS or they would lose another 25% of the companies...Im not saying it's perfect, but look at the NAZ carnage? It's not just the companies, it's also the market making/ecn free for all that allows perfectly legit companies to be pounded into submission by certain players whole are supposed to be "keeping an orderly market"
Nasdaq companies are smaller and more volatile. Thats a given. Its got nothing to do with the order execution system.
If you really want to see the difference between Nasdaq and NYSE. Bring up two stocks of equal volume. One Nasdaq and one NYSE - watch how the bid-ask in the Nasdaq moves in a linear manner (like the way a real market auction would move). Then watch the NYSE stock bid-ask movement - it jumps around all over the place in an erratic manner that has nothing to do with a normal market auction and everything to do with manipulation by the specialists.
It is time to open up the NYSE so that price discovery is made by competitive market forces and not by the whims and manipulations of self-serving specialists.
If you really want to see the difference between Nasdaq and NYSE. Bring up two stocks of equal volume. One Nasdaq and one NYSE - watch how the bid-ask in the Nasdaq moves in a linear manner (like the way a real market auction would move). Then watch the NYSE stock bid-ask movement - it jumps around all over the place in an erratic manner that has nothing to do with a normal market auction and everything to do with manipulation by the specialists.
It is time to open up the NYSE so that price discovery is made by competitive market forces and not by the whims and manipulations of self-serving specialists.
I respectfully disagree...for the most part, NYSE is built on the open auction system and creates a market by bringing buyers and sellers together...( in a perfect world)
NASDAQ has nothing to do with bringing buyers and sellers together...it's positioning and hide and seek between major and minor players and a bunch of ecns thrown in. For the most part, nasdaq is ruled by the whim of a Market maker. He will often adjust price and size in erratic and volatile moves to cater to HIS OWN personal needs first and foremost....On the Floor you would get in trouble for this. question: How many times have you entered an order in between on a NASDAQ stock that is thinly traded and seen no fill? How many times have you put out an offer within a penny and seen the MM go to sub pennies?
then again, it could just be the issues you trade too. each stock is different.
NASDAQ has nothing to do with bringing buyers and sellers together...it's positioning and hide and seek between major and minor players and a bunch of ecns thrown in. For the most part, nasdaq is ruled by the whim of a Market maker. He will often adjust price and size in erratic and volatile moves to cater to HIS OWN personal needs first and foremost....On the Floor you would get in trouble for this. question: How many times have you entered an order in between on a NASDAQ stock that is thinly traded and seen no fill? How many times have you put out an offer within a penny and seen the MM go to sub pennies?
then again, it could just be the issues you trade too. each stock is different.
This is the way its suppose to work in a competitive market auction.
The best bid or ask gets the trade. If you have the best bid on a thinly traded stock and you don't get an immediate fill - its because there is no one who wants the other side of your trade at that moment. Thats the way a market works. On a thinly traded NYSE stock try putting in a limit order that splits the spread and see if you get filled right away.
If a market maker jumps ahead of you and narrows the spread (he shows the best bid or ask) - he gets the trade. That is the way a competitive market works and that is how spreads get narrower which benefit everyone including widows and orphans who have their money in mutual funds. If you want an immediate fill on a thinly traded stock - put in a market order.
Well , let's agree to disagree but i believe the proof is in the pudding.....all us companies have felt the pinch of the last two or three years in the economy, yet look at the companies listed on NYSE vs NASDAQ? Again, NYSE was made to cater to investors not traders...i believe that they keep more order and the specialist does a better job of preventing irrational ups and downs that seemed to have destroyed the nasdaq 100....Have you ever been to the floor of NYSE? It's pretty impressive but it's also pretty simple....I was a guest of Bear a couple of times and i have to tell you , despite all the technology break troughs, its still signals, human interaction and believe it or not orderly. I think NASDAQ can be at times nothing more then computers trading against themselves with no regard. Just my opinion, but as I said before NYSE does suck for daytraders. Here's tyhe one question I have : would a NAZ Market Maker EVER take a small loss on ANY trade in order to facillitate orders and to keep the market steady? Specialist often have to buy/sell for their OWN acount and risk in order to maintain an orderly market.....imagine NASDAQ market makers doing that!!