NYSE 'investigation'

shneed · Apr 20, 2003

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Quote from Tea:

For the last time: price improvement on the NYSE is just the specialist taking money out of your pocket and handing you back half and calling it "price improvement".

Call it what you want, I still like it when it happens. By the way, in this day and age why do you think that NASDAQ is almost completely taken over by ECNs, and NYSE is virtually ECN free. Do you think that most people are just plain stupid for trading through the "outdated" specialist that "screws" them for every penny, or maybe that ecns are not necessary in the most efficient stock market in the world. If you can't make money trading NYSE and are able to make money in NASDAQ, by all means trade NASDAQ. More power to you. I mean that sincerely. I started out trading NASDAQ myself, I just think that NYSE is a natural progression in trading, especially if you want to trade size. I really think that you simply do not understand the way NYSE really works. I doubt that NYSE will go the way of NASDAQ or even the way of mini-futures. The fact that ecn's have not taken off on NYSE speaks for itself. When institutions want to buy a few million shares of a stock, they want the specialist to hold their hand, give them better price, not place the order through Island and pray.

shneed

Tea · Apr 20, 2003

Rtharp: it seems like we had this conversation before. I cannot figure out what your motivation is for wanting to preserve the current NYSE system.

My motivation is to trade with the least amount of friction and lowest cost lost to the middle man in a competitive market environment â this means I accept a wider spread if the liquidity is not there but want a tiny spread on liquid stocks and instant fills - just common sense I would think?

Quote from rtharp:

With the specialist system I can trade take a trade and find an opposing side. With ECN I'd run that stupid price up a point or 2 easily on a stock priced around 30.

An ECN without professional market makers probably wouldnât be practical, not to mention illiquid (you are right on that), but an electronic market like the Nasdaq system with market makers would work for the NYSE.

Quote from rtharp:
Think ECN's are liquid. Well watch a NASDAQ stock when it has serious news

You are right once again â when a Nasdaq stock has serious news it will move (of course ECNâs only make up 30-40% of Nasdaq volume?) â however, I prefer that to a NYSE stock that has serious news â they just halt the stock and you are trapped like a rat until the specialist decides at what level he wants to open the stock!

Quote from shneed: Do you think that most people are just plain stupid for trading through the "outdated" specialist that "screws" them for every penny

In a word, yes. I think the NYSE brain washing has worked on many people.

A final note: you guys seem scared that if the NYSE becomes more efficient and electronic that you will not be able to make money trading â if that is your only edge then you are in trouble!

A good trader doesnât have to depend on glitches in an antiquated order execution system/market to make money and, you can't stop progress.

Good luck!

shneed · Apr 20, 2003

Do you really believe that getting instant executions on NASDAQ or e-minis makes you a better trader? The one who is brainwashed is you. There are no glitches on NYSE and the system is far from antiquated. Greater minds than yours and mind believe it to be, otherwise it would be voted off by the institutional traders out there (by trading off the floor or through ecns). Again, the fact that you do not understand the way the NYSE works or cannot make money of it does not mean it is inefficient. The only thing that I am afraid of is amateurs declaring that trading is too difficult therefore the rules must be changed so they too can profit. Give me a break. Market crashed, blame the analysts for pushing NASDAQ stocks because it was obviously them not your own money management that caused money losses. The "masses" do not understand fractions, lets go to decimals. Individual investors should be saved from themselves, make them put up $25k before they could trade. Several specialists broke the rules, down with NYSE.

shneed

nitro · Apr 20, 2003

Escort the abusers off the floor and never allow them in the business again. Leave the NYSE method of trading/price discovery alone.

nitro

Tea · Apr 20, 2003

Quote from shneed:

Do you really believe that getting instant executions on NASDAQ or e-minis makes you a better trader?
shneed

Never said that..... just said it would reduce the friction in trading and lower my costs (slippage).

Quote from shneed:

Again, the fact that you ...... cannot make money of it does not mean it is inefficient.
shneed

You assume a lot.

Tea · Apr 20, 2003

Quote from nitro:

Escort the abusers off the floor and never allow them in the business again.
nitro

The whole system is abusive - you would have to eliminate the entire floor.

downtickboy · Apr 20, 2003

It would seem the inefficient NYSE market would provide opportunity for the informed trader. My only complaint with the NYSE system is that in a lot of cases now it is not being implimented in the way it was intended to be as evident by the recent GE specialist bust. When stocks are trading like they should as stated in the NYSE rule book then there are many advantages to trading NYSE stocks. Price improvement for the intune trader can add up to a lot of money per day. However to the uninformed trader, who sends market orders all all day long, the slippage by being on the wrong side of the market adds up to a lot of money lost.

However on the above comments on news stocks I don't think it makes much difference which market you are trading the opportunity to get no fills is about the same. On nasdaq you can see all the levels you can't hit for 50 cents because a 100K share buy order was sent in to supermontage before your was. On NYSE he just freezes the book and widens the spread 50 cents and does not print for 3 or 4 minutes.

Babak · Apr 20, 2003

Since this was ignored, I'll state it again and challenge anyone who supports the NYSE status quo to prove otherwise:

"You simply can not reconcile the conflicting motivations of a specialist with his stated purpose.

On the one hand they are supposed to keep fair and orderly markets at all times. And on the other hand they are seeking profit. One does not go hand in hand with the other. In fact one flies in the face of the other."

taodr · Apr 20, 2003

Quote from Babak:

Since this was ignored, I'll state it again and challenge anyone who supports the NYSE status quo to prove otherwise:

"You simply can not reconcile the conflicting motivations of a specialist with his stated purpose.

On the one hand they are supposed to keep fair and orderly markets at all times. And on the other hand they are seeking profit. One does not go hand in hand with the other. In fact one flies in the face of the other."

Absolutely dead on ! This licensed racketeering.

AAAintheBeltway · Apr 20, 2003

I found the reported quote by Finnerty that the specialist system was capitalism in action to be amusing yet sadly typical of the Wall Street mindset. Jim Cramer offered me an almost identical response when I criticized him for frontrunning analysts releases, even as he criticized everyone else for various sins. It is an odd view of capitalism. Capitalism is about competition, not a protected monopoly. It is about an even playing field, not bribing brokers with commish to get the early word or IPO allotments.