NYSE Front-Running needs to be addressed
- Thread starter hayman
- Start date
Don,
I believe what you say. There's a lot that goes on that we are not aware of, sitting in our offices. In your cited example, I would expect the NYSE to post both of these orders on the books, which rarely, if ever, occurs. The fact that NYSE OB is on a 5-second delay (this is another joke, and pet peeve of mine), does not help this visibility issue.
Ask them why the 5 sec delay, BTW. No excuse in today's technology-laden world.
Regards,
Doug
Do you really have a valid point above?
1. why a specialist should ever be allowed to make a price improvement for his own account. I.E. why should he be allowed step in front by a penny. I suggest they should never be allowed to improve for less than a nickel. That would improve things right there.
What makes you think it is him pennying you? There's a thing called Open Book now?
When you have been trading long enough you know what a competive books feel like and what a specialist book feels like. Lunch vs. morning. Etc. You can be wrong but you know. Also after making calls to dot services for myself and other traders, as an officer manager/owner for years, you get to know. I got quite good at knowing when I was cheated, knowing which excuse I would get and knowing when I was going to get a rebate or price change.
Now when you learn a book you know when you are getting screwed by the specialist. (you are wrong sometimes but you know)
2. Next I would ask them what percent of the stocks transactions and what percent of s stocks volume did they trade 5 years ago, and what percent now. After they answer ask them why have the #s in increased. Ask them if this is consitent with more people have direct access.
Would it be consistant with that thing called decimals? Yes it would if they were steping in front for excess profit. But with more people having direct access, their services should have been needed less. Why do you think they are being sued my fund companies
3. Ask them what percentage of days do they go home profitable.
Ask them how their profits have been each of the last five years.
Please tell me you work for free? No but I do not claim to be protecting the public or serving them well.
4. Ask them why they ask the penny brokers "you got any behind that". Ask them if that is legal? Ask them what percentage of the time they ask that question on orders of 50,000 or more.
Would you want to get hit by a train? or better yet, say they didn't say anything and poof,,,,,,,markets react even more volatile. Then you'll really complain ha. I thought they claimed they stepped in when no one else does? Why do we let them have a priviliged position if they are not buying when there is big selling. "Got any behind that is Proof" they are full of it. Besides I suspect someones fidiciary relatioship is being compromised.
5. Ask them if they are bonused or get to share in profits in any way based on their profits. Ask them if they get a bonus or a profit participation based on how well they serve the public? How exactly are they paid. And what do they get bonuses for?
They should be bonused based on public service to be consistent with their self serving statements at the nyse
6. Ask them how much money the specilist division of their companies made last year and how was that profit derived. I.E. how much came from making markets.
Wait, isn't that their job?
Oh so now they make big profits by being an middleman who asks "got any behind that?" Millions of dollars pay to front run me. Good program. Here comes Eurex
7. How often do they go home flat? or hedged?
Would that really matter to you? Do you think the specialist is going to move world markets over night and then penny you on a hundred shares? See above
1. why a specialist should ever be allowed to make a price improvement for his own account. I.E. why should he be allowed step in front by a penny. I suggest they should never be allowed to improve for less than a nickel. That would improve things right there.
What makes you think it is him pennying you? There's a thing called Open Book now?
When you have been trading long enough you know what a competive books feel like and what a specialist book feels like. Lunch vs. morning. Etc. You can be wrong but you know. Also after making calls to dot services for myself and other traders, as an officer manager/owner for years, you get to know. I got quite good at knowing when I was cheated, knowing which excuse I would get and knowing when I was going to get a rebate or price change.
Now when you learn a book you know when you are getting screwed by the specialist. (you are wrong sometimes but you know)
2. Next I would ask them what percent of the stocks transactions and what percent of s stocks volume did they trade 5 years ago, and what percent now. After they answer ask them why have the #s in increased. Ask them if this is consitent with more people have direct access.
Would it be consistant with that thing called decimals? Yes it would if they were steping in front for excess profit. But with more people having direct access, their services should have been needed less. Why do you think they are being sued my fund companies
3. Ask them what percentage of days do they go home profitable.
Ask them how their profits have been each of the last five years.
Please tell me you work for free? No but I do not claim to be protecting the public or serving them well.
4. Ask them why they ask the penny brokers "you got any behind that". Ask them if that is legal? Ask them what percentage of the time they ask that question on orders of 50,000 or more.
Would you want to get hit by a train? or better yet, say they didn't say anything and poof,,,,,,,markets react even more volatile. Then you'll really complain ha. I thought they claimed they stepped in when no one else does? Why do we let them have a priviliged position if they are not buying when there is big selling. "Got any behind that is Proof" they are full of it. Besides I suspect someones fidiciary relatioship is being compromised.
5. Ask them if they are bonused or get to share in profits in any way based on their profits. Ask them if they get a bonus or a profit participation based on how well they serve the public? How exactly are they paid. And what do they get bonuses for?
They should be bonused based on public service to be consistent with their self serving statements at the nyse
6. Ask them how much money the specilist division of their companies made last year and how was that profit derived. I.E. how much came from making markets.
Wait, isn't that their job?
Oh so now they make big profits by being an middleman who asks "got any behind that?" Millions of dollars pay to front run me. Good program. Here comes Eurex
7. How often do they go home flat? or hedged?
Would that really matter to you? Do you think the specialist is going to move world markets over night and then penny you on a hundred shares? See above
Valid point, of course. He did go out of his way to show me the "tracking system" that has recently been added to follow all the "principal" (specialist) orders vs. the "agency" (customer) orders.
He certainly expressed his concern about the "automated orders" and their constant input/cancels, and other major problems from their end. I explained that we only use the the type of order that cancels and replaces every 5 minutes, to save Specialist fees (he smiled and said that he "appreciates the help with the liquidity, and can get along with the fees sometimes" ..with a smile.
I know that I'm being painted as a cheerleader for the "system" and maybe even rightfully so...but maybe, just maybe, the more one understands or sees this system in action, others may feel the same way.
Don
Primarily to help with the broker/institution orders which amount for a major part of the share volume (not "tickets" or trades, but volume)...and to accomodate the different computer clocks for "time and sales" reviews...this is still done for the ITS (intermarket trading system, which does a big chunk of the volume as well)....
I noticed that we at BT, had 700 Million shares ordered yesterday, and only a small percentage of those orders actually filled....the concern over "cancels" (above), and the frequency of order input from many sources, might explain the need for a slight delay before any possibly "disputed" trade to take place.
Remember, these gusy are "held" responsible for all errors, trade throughs, etc.
More good debate...thanks for the input...
Don
I think anyone that looks at the alternative would be somewhat of a "cheerleader" for the NYSE, especially when it is being threatened. As it is I don't like the changes they are looking to make now. As I've said before, the only thing they need to do, as they've begun to do, is to enforce existing rules. I would also like to know why they are allowed to prevent people from getting naturally short. That is the only real issue I have with the NYSE. But otherwise, it is a MUCH better institution and system than NAS!
Jem, Missed boat, Martinez, and Hayman....The evolution of this discussion is going along rather well, IMO, and shows that there really shouldn't be a "war" over all this...On my radio show today we discussed the differences from another angle...not just Naz vs. Nyse, or pure electronic vs. specialist...but Speed vs. Price, and depth and breadth of markets. It seems that as we all become better informed on the "actual" vs. "perceived" events as they transpire via both methods, that we see things a bit differently.
One caller was advised that the ECN's are simply "for profit" companies that charge everyone, all the time, for every share...and yes, they want more ECN trading..."whoda thought".. LOL...I don't think that the ECN's are claiming to be the answer all the trading concerns...and they have many inherent problems (pricing of "out of range orders" is a big one)...as well. But don't for a minute think that they are there simply to provide a better place to trade, for altruistic purposes, as implied in Barron's today.
We, as traders, need to know the rules, follow them properly, and decided how to make money from the opportunity to be traders in the first place. Don't join the poker game, and complain because you lost money...I know none of you would do that...and the "dealer isn't always cheating whey you lose"...sometimes it's just the way it is.
Thanks again for the input...the article is getting longer each day...keep the questions and comments coming!
Don
One caller was advised that the ECN's are simply "for profit" companies that charge everyone, all the time, for every share...and yes, they want more ECN trading..."whoda thought".. LOL...I don't think that the ECN's are claiming to be the answer all the trading concerns...and they have many inherent problems (pricing of "out of range orders" is a big one)...as well. But don't for a minute think that they are there simply to provide a better place to trade, for altruistic purposes, as implied in Barron's today.
We, as traders, need to know the rules, follow them properly, and decided how to make money from the opportunity to be traders in the first place. Don't join the poker game, and complain because you lost money...I know none of you would do that...and the "dealer isn't always cheating whey you lose"...sometimes it's just the way it is.
Thanks again for the input...the article is getting longer each day...keep the questions and comments coming!
Don
Sorry but the "natural" laws of supply and demand of the marketplace is THE SAME AS THE MANIPULATION LAW HAHA !
Visible Front running by Nyse specialists has the advantage to be VISIBLE and SLOWER than INVISIBLE front running by electronics robots that's why in fact they don't need these specialists any more at term. So they do everything to dismiss them in front the public so that the public has the fake impression that the market's officials are working to clean the market's place hahahaha what a joke !
See also
http://www.elitetrader.com/vb/showthread.php?s=&postid=427598&highlight=NYSE#post427598
Visible Front running by Nyse specialists has the advantage to be VISIBLE and SLOWER than INVISIBLE front running by electronics robots that's why in fact they don't need these specialists any more at term. So they do everything to dismiss them in front the public so that the public has the fake impression that the market's officials are working to clean the market's place hahahaha what a joke !
See also
http://www.elitetrader.com/vb/showthread.php?s=&postid=427598&highlight=NYSE#post427598
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