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NYSE Front-Running needs to be addressed
- Thread starter hayman
- Start date
There are no tours, at least not ones available to the general public.
Quote from alanm:
Quote from Don Bright:
[the clerk] will ask the Specialist "we have 2400 shares excess to buy at market, where do you want print it?" - The Specialist will ask "what is my net position now?" - Clerk will tell him, and then the Specialist will provide the liquidity needed to fill these orders
Shouldn't the imbalance first be shown to the crowd, particularly if the spec knows that there are sellers near the inside and/or that the offer being quoted includes limit sell orders in the crowd? If there are buyers at 20.00, sellers at 20.03, and the last sale was a downtick at 20.01, is the spec justified in stepping in front and selling to the guy at 20.02? Does the answer change depending on the spec's current position? Is it different if there are sellers at 20.02 and the spec would have to sell to him at 20.01 (zero-minus tick)?
There is not always an active "crowd" there...if the Specialist knows about orders being held, then he will announce it. This sometimes causes the notorious "pennying" by other traders (as opposed to the Specialist). The brokers will usually place a small portion of their limit order "in the book" thus creating the NBBO at any given moment in time. The methods and rules of Electronic Trading (priorities and tracking) are of vital importance to any trader...so that they can benefit from the proper and consistent treatment of orders.
Basically, the more you know how the business is run, the better you can trade. It's worth the effort to truly understand the operation of this (or any) business where your money is at stake.
Don
OK, well it seems that the "bad guys" have committed to paying the fine, and will now have much better controls in place. I think it's too bad that a few bad apples caused such a poor perception at the NYSE. But, as in any large organization, there is certainly room for shenanigans.
I kinda wonder how they plan to pay out the money, to whom, and using what mehodology?
The contols that I saw last month will certainly keep the transparency everyone likes....
Don
I kinda wonder how they plan to pay out the money, to whom, and using what mehodology?
The contols that I saw last month will certainly keep the transparency everyone likes....
Don
As I noticed my reminder about the SEC fee decrease to an all-time low (I think) of 23.40/$M on April 1st, I wondered if part of that is giving us back some of what they've collected in fines already and/or anticipate collecting, or whether it'll get even better than this. Maybe someone could find and read the full report they submitted to Congress for their budget allocation request?
I'm betting that such a reduction in SEC/NASD/NYSE fees going forward will be the easiest solution, though not really fair to those who lost everything and went back to keeping money in their mattress.
Now we need to get Spitzer and/or the SEC interested in the options markets. I don't think they have any idea how bad they are. Makes the NYSE look sparkling clean.
I'm betting that such a reduction in SEC/NASD/NYSE fees going forward will be the easiest solution, though not really fair to those who lost everything and went back to keeping money in their mattress.
Now we need to get Spitzer and/or the SEC interested in the options markets. I don't think they have any idea how bad they are. Makes the NYSE look sparkling clean.
well, it's not a tour, and this information is 3 years old...
you go through a metal detector, up an elevator, and in an area that overlooks the floor. you could pick up a phone and hear the noise on the floor, but when i was there, all the phones were broken.
there's a little history of the nyse up there as well, a timeline or something.
when i worked for a financial institution that wasn't on the floor (not stocks), people in our company could get 'tours' of the floor by knowing someone at another firm. i was told that the pits in chicago (and i'm not sure which ones they were talking about, unfortunately) were absolutely amazing to walk through.
in summary - you needed to know someone to get on the floor.
you go through a metal detector, up an elevator, and in an area that overlooks the floor. you could pick up a phone and hear the noise on the floor, but when i was there, all the phones were broken.
there's a little history of the nyse up there as well, a timeline or something.
when i worked for a financial institution that wasn't on the floor (not stocks), people in our company could get 'tours' of the floor by knowing someone at another firm. i was told that the pits in chicago (and i'm not sure which ones they were talking about, unfortunately) were absolutely amazing to walk through.
in summary - you needed to know someone to get on the floor.
Quote from alanm:
As I noticed my reminder about the SEC fee decrease to an all-time low (I think) of 23.40/$M on April 1st, I wondered if part of that is giving us back some of what they've collected in fines already and/or anticipate collecting, or whether it'll get even better than this. Maybe someone could find and read the full report they submitted to Congress for their budget allocation request?
I'm betting that such a reduction in SEC/NASD/NYSE fees going forward will be the easiest solution, though not really fair to those who lost everything and went back to keeping money in their mattress.
Now we need to get Spitzer and/or the SEC interested in the options markets. I don't think they have any idea how bad they are. Makes the NYSE look sparkling clean.
I have to agree...Bob and I have been trading a couple thousand contracts a month recently...and boy are those spreads wide! And talk about trying to find any type of theoretical edge...not happening...we find a few, but very few real advantages....yet I really can't blame the market makers, why should they give money away? When you check the 3 ways,they're all within a penny or two of value.
I'm not saying that there is anything wrong going on, just not like the "good old days"...LOL
Don
From
http://biz.yahoo.com/rb/040330/financial_sec_specialists_4.html
'inferior prices for their trades, or failing to get their trades executed at all, regulators said.
Between 1999 and 2003, individuals at the firms frequently executed orders for their own dealer accounts, instead of matching customers' orders with each other where possible.
Spear Leeds will pay $45.3 million under the settlement. Parent Goldman Sachs last week reported first-quarter net profits of $1.29 billion, more than double the year-ago level.
Michael LaBranche, chief executive of LaBranche & Co., said he had no comment. His company will pay $63.5 million in the settlement. LaBranche & Co., the NYSE's largest share dealer, in January posted a fourth-quarter net loss of $156.9 million.
Fleet Specialists spokesman Charles Salmans said the firm had cooperated with regulators and is happy to have reached a settlement. It will pay $59.1 million under the agreement.
Dutch market maker Van der Moolen will pay $57.7 million; Bear Wagner, $16.3 million, regulators said in a statement.
The NYSE said on Monday the profitability of the seven specialist firms fell sharply in 2003. Thain said questions about their profits are "legitimate."
LaBranche said earlier this month it must refinance $100 million of debt or possibly sell assets or issue shares.
"The financial condition of the specialist firms is definitely a concern of the New York Stock Exchange ... We are comfortable with their financial condition," Thain said. (Additional reporting by John Poirier in Washington; Jake Keaveny, Brendan Intindola, Nicole Maestri in New York) '.
http://biz.yahoo.com/rb/040330/financial_sec_specialists_4.html
'inferior prices for their trades, or failing to get their trades executed at all, regulators said.
Between 1999 and 2003, individuals at the firms frequently executed orders for their own dealer accounts, instead of matching customers' orders with each other where possible.
Spear Leeds will pay $45.3 million under the settlement. Parent Goldman Sachs last week reported first-quarter net profits of $1.29 billion, more than double the year-ago level.
Michael LaBranche, chief executive of LaBranche & Co., said he had no comment. His company will pay $63.5 million in the settlement. LaBranche & Co., the NYSE's largest share dealer, in January posted a fourth-quarter net loss of $156.9 million.
Fleet Specialists spokesman Charles Salmans said the firm had cooperated with regulators and is happy to have reached a settlement. It will pay $59.1 million under the agreement.
Dutch market maker Van der Moolen will pay $57.7 million; Bear Wagner, $16.3 million, regulators said in a statement.
The NYSE said on Monday the profitability of the seven specialist firms fell sharply in 2003. Thain said questions about their profits are "legitimate."
LaBranche said earlier this month it must refinance $100 million of debt or possibly sell assets or issue shares.
"The financial condition of the specialist firms is definitely a concern of the New York Stock Exchange ... We are comfortable with their financial condition," Thain said. (Additional reporting by John Poirier in Washington; Jake Keaveny, Brendan Intindola, Nicole Maestri in New York) '.
Quote from manz66:
Michael LaBranche, chief executive of LaBranche & Co., said he had no comment. His company will pay $63.5 million in the settlement. LaBranche & Co., the NYSE's largest share dealer, in January posted a fourth-quarter net loss of $156.9 million.
The NYSE said on Monday the profitability of the seven specialist firms fell sharply in 2003. Thain said questions about their profits are "legitimate."
LaBranche said earlier this month it must refinance $100 million of debt or possibly sell assets or issue shares.
"The financial condition of the specialist firms is definitely a concern of the New York Stock Exchange ... We are comfortable with their financial condition," Thain said. (Additional reporting by John Poirier in Washington; Jake Keaveny, Brendan Intindola, Nicole Maestri in New York) '.
Ahhh, So sorry. So they can't make a profit and live high off the hog without front running the customer? Aparrently the SEC will let them get off with a fine instead of jail time. If it was me or you it would be jail.