The reason ANY shares traded on NYSE is because government laws and rules give NYSE an unfair advantage over competitors. If it hadn't been for that unfair advantage, then far more shares would have traded on Nasdaq than the percentage which actually did trade. Or perhaps the IPO would never have occurred, because then, NYSE business prospects would have been bleaker, in the absence of government protections for the specialist system monopoly, and so NYX shares, representing ownership in the NYSE, would have been worth less or perhaps even worthless.
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NYSE Specialist - Stay or Go - vote here
- Thread starter Hamlet
- Start date
The reason ANY shares traded on NYSE is because government laws and rules give NYSE an unfair advantage over competitors. If it hadn't been for that unfair advantage, then far more shares would have traded on Nasdaq than the percentage which actually did trade. Or perhaps the IPO would never have occurred, because then, NYSE business prospects would have been bleaker, in the absence of government protections for the specialist system monopoly, and so NYX shares, representing ownership in the NYSE, would have been worth less or perhaps even worthless.
Quote from jimrockford:
The reason ANY shares traded on NYSE is because government laws and rules give NYSE an unfair advantage over competitors. If it hadn't been for that unfair advantage, then far more shares would have traded on Nasdaq than the percentage which actually did trade. Or perhaps the IPO would never have occurred, because then, NYSE business prospects would have been bleaker, in the absence of government protections for the specialist system monopoly, and so NYX shares, representing ownership in the NYSE, would have been worth less or perhaps even worthless.
A greater majority of NYX shares got traded on the Nasdaq. And the share price went up, with further secondary, tertiary offerings in place.
According to your premise, since more shares (2/3) got traded on the Nasdaq, why did their share price rise, with no correction, just straight up. which may suggest a technical deficiency in your argument against the NYSE.
Quote from 1000:
A greater majority of NYX shares got traded on the Nasdaq. And the share price went up, with further secondary, tertiary offerings in place.
According to your premise, since more shares (2/3) got traded on the Nasdaq, why did their share price rise, with no correction, just straight up. which may suggest a technical deficiency in your argument against the NYSE.
Fluctuations in NYX share prices are not relevant to my argument and do not suggest any deficiency in my argument.
I voted to stay with one qualification. That is speed. If one of their main purposes is to be buyers when there are none and sellers when there are none or few.
I don't see the help they provide it it takes them 30 seconds to make up there mind. They give themselves 30 seconds to see what is coming behind the trade you are about to make.
To say that is a bit of an edge for them is putting it mildly. Either take the trade as in ecn speed or get out of the way, at which point I would change my vote to "go"
don
I don't see the help they provide it it takes them 30 seconds to make up there mind. They give themselves 30 seconds to see what is coming behind the trade you are about to make.
To say that is a bit of an edge for them is putting it mildly. Either take the trade as in ecn speed or get out of the way, at which point I would change my vote to "go"
don
Quote from jimrockford:
You still do not understand.
The government laws and rules artificially suppress the creation and development of competitors to the specialist system. This reduces choice for everybody. This reduces choices for companies seeking to list their shares. This reduces choice for traders and investors seeking to trade. If the government abolishes laws and rules giving specialists an unfair advantage, then this would increase opportunities for competitors to take the place of the specialists. If competitors do a better job than the specialists, then market forces will reward those competitors who do a better job. This would cause the specialist system to wither and die, so that it can be replaced by competitors who will do a better job for everybody.
I am arguing for more choice, which will require that the government abolish laws and rules favoring the specialists. Laws and rules favoring specialists reduce choice for everybody. The government has been gradually reducing its support for the specialist system, which is losing its advantages, and giving strength to the competitors. This is a good process and we should demand that the government accelerate it.
I would like to respectfully disagree.
There is no suppression, as there are other systems in play and running successfully (Nasdaq, AMEX, etc).
Specialist does not reduce choice for everybody, because of the other successful systems available for trading.
Companies can seek to list at any other exchange, not just NYSE.
What other types of competitors are you suggesting (examples please)?
Market never rewards. It would create a strangle, causing undercutting, and so mergers, eventually reducing competition and creating a new monopoly.
Define "do a better job" please.
What rules are you talking about that favor specialists?
What choice is reduced for everybody (and who are the everybody)?
What gradual reduction of support, please define?
What advantages is it losing?
Accelerate what?
Please be objective.
Quote from jimrockford:
If you know the difference between capitalism and socialism, then you should know that government laws and rules, protecting a monopoly from competition, are a socialist policy, not a capitalist policy. I am advocating for a mixture of capitalist and socialist policies. I am explaining why it was so ludicrous for 1000 to equate the specialist system with capitalism, and its critics with communism. I am advocating a pro-capitalist position for withdrawal of government laws and rules which unfairly protect the specialists from competition. It seems you are having difficulty understanding me because you don't know the differences between capitalism, socialism, and communism. Please don't ask me to explain the differences. Go get a high school diploma first, and then maybe you will be in a position to contribute something to this discussion.
Yeap, self insults again, that's the losers corner.
The reason is the strangle. An e.g. is the e-brokers. They are now charging something like 99cents for a trade, which is going to lead to melt-down. The reason is that it always does (GM debacle would be analogous). So we have bankruptcies, leading to consolidation.
This e.g. causes a secondary monopoly, often no better, with shrinkage.
Something no one would wish for.
Quote from Donkell:
I voted to stay with one qualification. That is speed. If one of their main purposes is to be buyers when there are none and sellers when there are none or few.
I don't see the help they provide it it takes them 30 seconds to make up there mind. They give themselves 30 seconds to see what is coming behind the trade you are about to make.
To say that is a bit of an edge for them is putting it mildly. Either take the trade as in ecn speed or get out of the way, at which point I would change my vote to "go"
don
Agreed in part, but I would say stay. I would just fine whoever is caught rubber-necking. This is because, as jimrockford so gracefully glided by, the argument of maintenance/sustenance. So your not painting every specialist with the same brush.
The I 95, speeding BMWs analogy with Elliott Spitzer being the radar trap, that I gave earlier.
Quote from jimrockford:
zdreq,
I believe that the NYSE was vehemently opposed to the new rule change. It sounds to me like you are a bit confused about the trade thru rule. The old trade thru rule gave NYSE very strong, but very unfair, competitive advantages which it did not deserve. The old trade thru rule was one of the various government protections which helped make possible the ongoing NYSE racket. The new trade thru rule essentially eliminates the unfair advantage to NYSE. The new trade thru rule allows electronic markets to trade thru non-electronically executable NYSE quotes. The new trade thru rule is a step forward.
http://www.elitetrader.com/vb/showthread.php?s=&threadid=47054&highlight
continuation-this rule is a direct result of lobbying by the NYSE in order to limit competiton from nasdaq .
Registered: Feb 2002
Posts: 1686
03-24-05 07:34 AM
Donaldson's Folly
By PETER J. WALLISON and JAMIE SELWAY
March 24, 2005; Page A14
Wall Street Journal
It is rare that a chairman of a regulatory commission defies the wishes of a powerful subcommittee chairman in Congress, and rarer still when he presses forward with a regulation opposed by his party, the administration who appointed him, and substantial portions of the regulated industry. But that's what appears to be happening at the Securities and Exchange Commission.
The issue is the so-called trade-through rule, which requires that an investor trade at the best price in the market before trading at inferior prices. SEC Chairman William Donaldson is pressing ahead with a plan to apply the rule -- which now only applies to stocks listed on the New York Stock Exchange and other registered exchanges -- to Nasdaq. His plan is opposed by Nasdaq itself, as well as the automated markets (known as ECNs) that trade Nasdaq securities, and many institutional and other investors who have found Nasdaq to be a flexible and competitive market because of the absence of a trade-through rule. Despite a request from Richard Baker, chair of the House Subcommittee on Capital Markets, who has called the rule "the worst public policy I have seen proposed for the markets in my years in Congress," Chairman Donaldson has scheduled a vote on the rule for April 6. And if he is successful in getting the rule adopted, it will only be with the support of the two Democratic commissioners. The Republicans appointed by President Bush will vote no.
In an effort to spiff-up his plan, Chairman Donaldson has rechristened the rule the "Best Price Rule," but this is misleading. The best price in the market at any moment may not be best price for a particular investor. For example, under the rule a buyer who wants to pay $20.05 for 10,000 shares of XYZ Corp cannot trade at that price in one market when another is offering 100 shares at $20.00. This sounds reasonable, if price is the sole determinant. But what if the market offering 10,000 shares at $20.05 can execute the trade in milliseconds, while the other takes minutes to buy 100 shares at $20? By the time that trade has been effected the offer of $20.05 may be gone, and the new market price for 10,000 shares is $20.10. Has the rule then really allowed the investor to get the best price? By dumbing down the choice to a single variable -- price -- the trade-through rule reduces the options of investors and undermines competition among markets for the trading interest of investors.
The interesting question in all this is why William Donaldson is willing to brave the humiliation that will come from defying Congress, the administration, and the views of much of the industry he regulates. None of his published arguments provides an answer, since the rationale is so weak. First, he sees the rule as a supplement to the broker's requirement to effect "best execution" of a customer's order -- that's why he labels it the Best Price Rule -- but for the aforementioned reasons best execution is not synonymous with the best price. And indeed, because of the difficulty of determining what is best execution for a particular investor, the SEC has never used the trade-through rule to bring a best execution case against a broker.
He also claims the rule will protect retail limit orders -- orders to buy or sell at a specific price -- from being bypassed. And perhaps it will, but at the cost of market efficiency. The SEC's own data shows that trade-throughs -- where a limit order is bypassed in favor of an inferior price -- are relatively rare events, occurring less than 2% of the time. To prevent this from happening, however, the entire market would have to be funneled to this 2%. It's as though no one could buy eggs at more than $1 a dozen, irrespective of quality, until all the eggs at that price have been bought. No wonder that the big retail discount brokers, Schwab and Ameritrade -- whose customers place the limit orders that the rule is intended to protect -- oppose the rule.
Finally, Chairman Donaldson argues that the rule encourages the placement of limit orders and thus enhances liquidity. The implication is that investors will not place limit orders without the protection of the rule. Oddly, however, those who place most of the limit orders and most rely on the existence of market liquidity -- institutional investors like Fidelity -- oppose extending the rule. They argue that the Nasdaq market, without a trade-through rule, is a better market than the NYSE -- where the rule is now applicable.
Our securities markets serve as one of the cornerstones for President Bush's vision of an Ownership Society, a program that will in part reduce the role of the government in directing the choices Americans make about their lives. How ironic it would be if, in this administration, the SEC adopts a regulation that does the opposite, extending regulation to Nasdaq -- a market that is functioning well without SEC intervention.
Mr. Wallison is a resident fellow at the American Enterprise Institute and a former general counsel of the Treasury. Mr. Selway is managing director of White Cap Trading."
Registered: Feb 2002
Posts: 1686
03-24-05 07:34 AM
Donaldson's Folly
By PETER J. WALLISON and JAMIE SELWAY
March 24, 2005; Page A14
Wall Street Journal
It is rare that a chairman of a regulatory commission defies the wishes of a powerful subcommittee chairman in Congress, and rarer still when he presses forward with a regulation opposed by his party, the administration who appointed him, and substantial portions of the regulated industry. But that's what appears to be happening at the Securities and Exchange Commission.
The issue is the so-called trade-through rule, which requires that an investor trade at the best price in the market before trading at inferior prices. SEC Chairman William Donaldson is pressing ahead with a plan to apply the rule -- which now only applies to stocks listed on the New York Stock Exchange and other registered exchanges -- to Nasdaq. His plan is opposed by Nasdaq itself, as well as the automated markets (known as ECNs) that trade Nasdaq securities, and many institutional and other investors who have found Nasdaq to be a flexible and competitive market because of the absence of a trade-through rule. Despite a request from Richard Baker, chair of the House Subcommittee on Capital Markets, who has called the rule "the worst public policy I have seen proposed for the markets in my years in Congress," Chairman Donaldson has scheduled a vote on the rule for April 6. And if he is successful in getting the rule adopted, it will only be with the support of the two Democratic commissioners. The Republicans appointed by President Bush will vote no.
In an effort to spiff-up his plan, Chairman Donaldson has rechristened the rule the "Best Price Rule," but this is misleading. The best price in the market at any moment may not be best price for a particular investor. For example, under the rule a buyer who wants to pay $20.05 for 10,000 shares of XYZ Corp cannot trade at that price in one market when another is offering 100 shares at $20.00. This sounds reasonable, if price is the sole determinant. But what if the market offering 10,000 shares at $20.05 can execute the trade in milliseconds, while the other takes minutes to buy 100 shares at $20? By the time that trade has been effected the offer of $20.05 may be gone, and the new market price for 10,000 shares is $20.10. Has the rule then really allowed the investor to get the best price? By dumbing down the choice to a single variable -- price -- the trade-through rule reduces the options of investors and undermines competition among markets for the trading interest of investors.
The interesting question in all this is why William Donaldson is willing to brave the humiliation that will come from defying Congress, the administration, and the views of much of the industry he regulates. None of his published arguments provides an answer, since the rationale is so weak. First, he sees the rule as a supplement to the broker's requirement to effect "best execution" of a customer's order -- that's why he labels it the Best Price Rule -- but for the aforementioned reasons best execution is not synonymous with the best price. And indeed, because of the difficulty of determining what is best execution for a particular investor, the SEC has never used the trade-through rule to bring a best execution case against a broker.
He also claims the rule will protect retail limit orders -- orders to buy or sell at a specific price -- from being bypassed. And perhaps it will, but at the cost of market efficiency. The SEC's own data shows that trade-throughs -- where a limit order is bypassed in favor of an inferior price -- are relatively rare events, occurring less than 2% of the time. To prevent this from happening, however, the entire market would have to be funneled to this 2%. It's as though no one could buy eggs at more than $1 a dozen, irrespective of quality, until all the eggs at that price have been bought. No wonder that the big retail discount brokers, Schwab and Ameritrade -- whose customers place the limit orders that the rule is intended to protect -- oppose the rule.
Finally, Chairman Donaldson argues that the rule encourages the placement of limit orders and thus enhances liquidity. The implication is that investors will not place limit orders without the protection of the rule. Oddly, however, those who place most of the limit orders and most rely on the existence of market liquidity -- institutional investors like Fidelity -- oppose extending the rule. They argue that the Nasdaq market, without a trade-through rule, is a better market than the NYSE -- where the rule is now applicable.
Our securities markets serve as one of the cornerstones for President Bush's vision of an Ownership Society, a program that will in part reduce the role of the government in directing the choices Americans make about their lives. How ironic it would be if, in this administration, the SEC adopts a regulation that does the opposite, extending regulation to Nasdaq -- a market that is functioning well without SEC intervention.
Mr. Wallison is a resident fellow at the American Enterprise Institute and a former general counsel of the Treasury. Mr. Selway is managing director of White Cap Trading."
just21-
Registered: Feb 2002
Posts: 1686
04-04-05 05:25 A
04-04-05 05:25 AM"We're left to conclude that this is all being engineered to help the NYSE. The Big Board is gradually introducing technology that will help it to better compete with faster electronic networks. But it needs time for the transition, and Mr. Donaldson is apparently acting as its protector. We have nothing against the NYSE's specialist trading system, if it is able to hold its own in the marketplace. But giving the Big Board special protections goes contrary to the very mission of the SEC -- which is to promote competitive and efficient markets."
Registered: Feb 2002
Posts: 1686
04-04-05 05:25 A
04-04-05 05:25 AM"We're left to conclude that this is all being engineered to help the NYSE. The Big Board is gradually introducing technology that will help it to better compete with faster electronic networks. But it needs time for the transition, and Mr. Donaldson is apparently acting as its protector. We have nothing against the NYSE's specialist trading system, if it is able to hold its own in the marketplace. But giving the Big Board special protections goes contrary to the very mission of the SEC -- which is to promote competitive and efficient markets."