Mamma Mia! The union of many market makers is a bad thing or not?

[abnormal]

I believe that for efficient markets we need
many small market makers who work in a different way.

In the last period there have been many unions or sales
of "market making" compartments.

The sector is perhaps more difficult but this union decreases
liquidity and competitiveness in providing the best prices.


What do you think about it?

 

[beerntrading]

It's not like consolidation would hurt the market any. If spreads get to wide, someone else will fill it. Even as a small retail guy, I can keep MM's honest when vol spikes and spreads get wider than the Hudson.

 

[Scataphagos]

I believe that for efficient markets we need
many small market makers who work in a different way.

In the last period there have been many unions or sales
of "market making" compartments.

The sector is perhaps more difficult but this union decreases
liquidity and competitiveness in providing the best prices.


What do you think about it?

Your concern seems to be "all about fills".

If that's the case, you're fishin' in a dry hole. Whether or not you make money in the markets has little to do with "efficient fills".

 

[beerntrading]

If that's the case, you're fishin' in a dry hole. Whether or not you make money in the markets has little to do with "efficient fills".

I wholeheartedly disagree with this.

 

[Scataphagos]

I wholeheartedly disagree with this.

So... you're saying, "If I got filled $.01 better on each side, I'd be a success. If not, I'm losing"?

 

[beerntrading]

So... you're saying, "If I got filled $.01 better on each side, I'd be a success. If not, I'm losing"?

No, I'm saying as an option trader, taking .05-.15 on the spread of every entry and stop (of contracts valued under $2) makes a huge difference.

I will agree with you though, when they go really well and are deep ITM, I care little of the cost of exit commission (hence my specifying entry and stop above).

But with the number of round trips I make in a year, good fills account for about 15% of my account value vs. bad fills.

 

[Scataphagos]

No, I'm saying as an option trader, taking .05-.15 on the spread of every entry and stop (of contracts valued under $2) makes a huge difference.

I will agree with you though, when they go really well and are deep ITM, I care little of the cost of exit commission (hence my specifying entry and stop above).

But with the number of round trips I make in a year, good fills account for about 15% of my account value vs. bad fills.

Options... yeah, well.... their big spreads and all.

Somebody's making bank on those spreads, and they're likely not going to let you in on it.

 

[beerntrading]

Options... yeah, well.... their big spreads and all.

Somebody's making bank on those spreads, and they're likely not going to let you in on it.

Big guys pushing each other to the front of the line leaves a lot of opportunities for a small guy to sneak in. I spend more effort fishing liquidity than anything else during the day.

...now if only I could rest on the bid AND the ask.

 

[ajacobson]

It's kind of been done already. Most of the small liquidity providers have been consolidated into the large ones. End or adapt maker/taker and you could get a few new smaller players to restart. Right now it's too expensive both in outright costs and technology

 

[abnormal]

Guys, your answers leave me very puzzled.

I am not an institutional trader. but my revenue from 1 mln / 3 mln i do.
and i use a stupid algorithm that breaks up the order and distributes it over a period of a few minutes.

More small market makers put themselves in as a counterpart I will benefit from it. or not? .
I am not going to calculate the differences since I am trading in companies that exceed 2 billion in capitalization. this is in any case intraday trading.




Sorry for my Italian but i am suffering from Asperger's syndrome.