Observations on the NYSE specialist.
- Thread starter oliver777
- Start date
Hamlet doesn't know anything about me. He does not know who I am, or how much money I will make in my lifetime, or what I have already achieved in my lifetime. He only pretends to know these things, because it is his agenda to insult people without regard to honesty or truthfulness.
I have repeatedly acknowledged the true fact he highlights, that lots of people daytrade NYSE profitably. This fact does not in any way conflict with my argument that both traders as a whole, and society as a whole, would benefit by eliminating the specialist system and jailing the criminals who corrupt it.
I won't invest my time trying to find trading strategies by which to profit from NYSE inefficiencies. I don't have great confidence in the long-term viability of trading strategies depending on a system of parasitic corruption, which seems unlikely to survive the ongoing technological revolution. I think that the specialist system is, in the long run, doomed. The question is not if, but when, we will finally reject this parasitic system.
No rational counter-arguments have been advanced, in this thread, in favor of the specialist system. The pro-specialist postings have falsely described my position, in order to make it sound unreasonable, or they have engaged in petty, childish, primitive personal insults.
I have repeatedly acknowledged the true fact he highlights, that lots of people daytrade NYSE profitably. This fact does not in any way conflict with my argument that both traders as a whole, and society as a whole, would benefit by eliminating the specialist system and jailing the criminals who corrupt it.
I won't invest my time trying to find trading strategies by which to profit from NYSE inefficiencies. I don't have great confidence in the long-term viability of trading strategies depending on a system of parasitic corruption, which seems unlikely to survive the ongoing technological revolution. I think that the specialist system is, in the long run, doomed. The question is not if, but when, we will finally reject this parasitic system.
No rational counter-arguments have been advanced, in this thread, in favor of the specialist system. The pro-specialist postings have falsely described my position, in order to make it sound unreasonable, or they have engaged in petty, childish, primitive personal insults.
Jim, congrats on having the resolve to stand by your opinions, I wholeheartedly agree with you and have seem similar discrepancies from the NYSE (especially when it comes to fake quotes and fake sizes), all of which a typical trader uses to enter or exit a position,
Why anyone would disagree is beyond me , my guess is they are here solely for the specialist (I've seen Mr Bright stand up for the specialist earlier in the thread, I'm sure there is some monetary gain from his support).
Why anyone would disagree is beyond me , my guess is they are here solely for the specialist (I've seen Mr Bright stand up for the specialist earlier in the thread, I'm sure there is some monetary gain from his support).
Jim: Well said !!! His Q about pink sheet stocks is another example of his child like thinking process.
While I agree with almost all of your comments, I do have to say that we often see similar activity on the part of NASD MM's and other players -- probably including you and me. Depending on which MM works my order when I enter limit orders if I then cancel, another observer may think the MM is gaming them cause the bid or offer disappeared.
Same with NYSE, Your best limit bid or offer should be displayed right away. If you then cancel - how do I know if it was your bid or the Spec's?
There seem to be two camps to this whole issue. One camp is adamantly against the way the system is structured around specialists, saying that they abuse the authority and power given to them. While the other camp says, nudge, nudge, wink, wink, join in and get as much as you can along with the thieves...er, specialists.
I can totally understand why someone like Don would defend the specialist system. After all the vast bulk of his business is to stride in arm in arm with the specialist (OO trades). Take away that edge and his firm may have to learn how to trade all over again. Its much easier to malign brokers, traders, etc. and pooh-poo the critics.
Ultimately the specialist system is in its last throes. They just don't know it yet. Like previous corporate dinosaurs they will thrash about and make a lot of noise... but their demise is inevitable.
Good riddance.
I can totally understand why someone like Don would defend the specialist system. After all the vast bulk of his business is to stride in arm in arm with the specialist (OO trades). Take away that edge and his firm may have to learn how to trade all over again. Its much easier to malign brokers, traders, etc. and pooh-poo the critics.
Ultimately the specialist system is in its last throes. They just don't know it yet. Like previous corporate dinosaurs they will thrash about and make a lot of noise... but their demise is inevitable.
Good riddance.
Markets, including both NYSE and Nasdaq, will never be entirely free of corruption, even if we do eliminate the specialist system. The special case of SPY allows us to make a side by side comparison of NYSE against ECNs and Nasdaq. This comparison demonstrates that NYSE performs substantially worse than the alternatives. The horse-and-buggy era technology and structure of the specialist system concentrates far more power, valuable information, and opportunity for abuse, in the hands of the specialist, than it does in the less centralized, more competitive, and more technologically advanced ECNs and Nasdaq. The evidence from law enforcement and regulatory histories overwhelmingly demonstrates a far greater problem of corruption in NYSE than in ECNs or Nasdaq. If we want to improve the quality of our markets for society as a whole, and if we want to improve trading opportunities for traders as a whole, then we must start by dismantling the parasitic system of NYSE corruption.
I have no objection to the rapid flashings and cancellations of orders. My demands, in this respect, are that once a resting order is hit by an opposing order agreeing to execute against the resting order, it should then become too late to cancel the resting order. This is what the SEC's "firm quote rule" says, and I say it should be enforced. I also demand that once an order has been cancelled or executed, any publicly displayed quotation based on that order should be promptly updated, using modern day technology, so that market participants will not be deceived as to the true state of the market. These are among the various other reforms which would greatly reduce the costs and risks of trading and increase the opportunities for trading, both for traders as a profession and for society as a whole.
I enjoyed your post, Babak, and I regret only that I could not express myself as poetically as you.
Don defends the NYSE system of parasitic corruption because he financially benefits from it. His defense is based on all sorts of untrue information. First, he incorrectly claimed that I was getting bad fill prices because my broker, Interactive Brokers, was taking the other side of my trades and then reporting them as NYSE executions. Untrue. Second, he incorrectly claimed that I got bad prices because IB sells equity order flow, and that he confirmed this by reading IB's customer account agreement. IB doesn't sell equity order flow, and the IB agreement doesn't say that IB sells equity order flow. Third, he incorrectly claimed that I got bad prices because IB matched my orders against those of other IB customers. Wrong again. Fourth, he incorrectly suggested that my executions were inferior because IB, unlike Bright Trading, fails to provide access to the Goldman Sachs pool of liquidity for NYSE-traded issues. The truth is that IB does provide such access, through Nasdaq's SuperIntermarket facility (displayed as Supersoes on the IB platform), not only to the Goldman Sachs pool, but also to all the similar pools operated by all the other Nasdaq market-makers as well. Wrong, wrong, wrong, wrong, Don.
The icing on the cake was Don's amazing claim that:
This can't possibly be reconciled with the regulatory and law enforcement history of specialist cheating and stealing, for example, as documented in the Washington Post article I posted earlier in this thread.
http://www.washingtonpost.com/wp-dyn/articles/A46486-2005Apr12.html
Perhaps the greatest scam of all is the NYSE's continued use of manual execution, in such a way as to enable cheating and stealing at a level impossible to sustain were NYSE to deploy modern technology.