Observations on the NYSE specialist.

[jimrockford]

Quote from Hamlet:

You need to learn the rules; how can you enter a trading arena without knowing the rules? Don't be like Mr. Rockford.
Any serious trader should know that long sales take priority over short sales.

All of you guys who think the spec is out to get you and takes pains to screw you do not know the rules and characteristics of the exchange (besides having very wild imaginations, judging from your stated interpretations of the scenarios you describe here; seen any black helicopters lately?). I suggest you get an education before your next trade. This business has a 95% fail rate.

I hope that if I am wrong, somebody more knowledgeable, like alanm or Don Bright, will correct me.

I believe that Hamlet is incorrect to say that long sales generally have priority over short sales. I believe that this is neither a NYSE rule nor a United States rule. I believe that NYSE rules are opposite to Hamlet's assertion.

I believe that the uptick rule can bar some short sell orders from execution, when the uptick rule's price test is not met, but that during those times that a short sale order is not barred by the uptick rule, the short sale order suffers no detriment to its priority based on the fact that it is short.

NYSE rules sometimes give priority to a larger size order, over a smaller size order at the same price, even though the smaller size order arrived first. I suspect this is what happened to Dan (dwl603).

 

[jimrockford]

Dan,

I forgot to mention that NYSE rules also sometimes place a larger size order "on parity" as to its priority, relative to a smaller size order, even though the smaller size order arrived first in time. If competing orders are on parity, then a random choice or "match" is made, to determine which order will receive the next available print. If you win a "match", but receive only a partial execution, then the unexecuted balance of your order may continue to be on parity with the same other competing orders, or, as a result of its smaller size, or the arrival of new competing orders, the remaining balance of your order can actually be reduced in priority.

 

[Hamlet]

Quote from jimrockford:


NYSE rules sometimes give priority to a larger size order, over a smaller size order at the same price, even though the smaller size order arrived first. I suspect this is what happened to Dan (dwl603).

All you do is talk out of your ass.

More disinformation.


You also ignore the fact that it was already demonstrated that you are a charlatan. Just here to add to the evidence?

 

[jimrockford]

Quote from Hamlet:

All you do is talk out of your ass.

More disinformation.


You also ignore the fact that it was already demonstrated that you are a charlatan. Just here to add to the evidence?

NYSE Rule 72, at http://rules.nyse.com/nysetools/Exc...e=chp_1_3&manual=/nyse/nyse_rules/nyse-rules/, disproves Hamlet's assertions as follows:

Rule 72. Priority and Precedence of Bids and Offers

I. Bids.—Where bids are made at the same price, the priority and precedence shall be determined as follows:

(a) ***

(b) ***

Precedence of bids equaling or exceeding amount offered

(c)(P) When no bid is entitled to priority under paragraph (a) hereof, (or when a bid entitled to priority or precedence has been filled and a balance of the offer remains unfilled), all bids for a number of shares of stock or principal amount of bonds equaling or exceeding the number of shares of stock or principal amount of bonds in the offer or balance, shall be on parity and entitled to precedence over bids for less than the number of shares of stock or principal amount of bonds in such offer or balance, subject to the condition that, with respect to bids made as part of the auction market if it is possible to determine clearly the order of time in which the bids so entitled to precedence were made, such bids shall be filled in that order except that no bids in Floor broker agency interest files or specialist interest files shall be entitled to precedence.

Precedence of bids for amounts less than amount offered

(d)(P) When no bid is entitled to priority under paragraph (a) hereof (or when a bid entitled to priority or precedence has been filled and a balance of the offer remains unfilled) and no bid has been made for a number of shares of stock or principal amount of bonds equaling or exceeding the number of shares of stock or principal amount of bonds in the offer or balance, the bid for the largest number of shares of stock or greatest principal amount of bonds shall have precedence, subject to the condition that, with respect to bids made as part of the auction market if two or more such bids for the same number of shares of stock or principal amount of bonds have been made, and it is possible to determine clearly the order of time in which they were made, such bids shall be filled in that order except that no bids in Floor broker agency interest files or specialist interest files shall be entitled to precedence.

Simultaneous bids

(e)(P) When bids are made simultaneously, or when it is impossible to determine clearly the order of time in which they were made, with respect to bids made as part of the auction market, all such bids shall be on parity subject only to precedence based on the size of the bid under the provisions of paragraphs (c) and (d) hereof, except that no bids in Floor broker agency interest files or specialist interest files shall be entitled to precedence.

Sale or cancellation removes bids from Floor

(f)(P) A sale or the cancellation of an entire bid or offer entitled to priority shall remove all bids from the Floor except that if the number of shares of stock or principal amount of bonds offered exceeds the number of shares or principal amount specified in the bid having priority or precedence, a sale of the unfilled balance to other bidders shall be governed by the provisions of these Rules as though no sales had been made to the bidders having priority or precedence.

Subsequent bids

(g)(P) After bids have been removed from the Floor under the provisions of paragraph (f) hereof, priority and precedence shall be determined, in accordance with these Rules, by subsequent bids.

(h) ***

(i) ***

II. Offers.—Where offers are at the same price the priority, parity and precedence shall be determined in the same manner as specified in the case of bids. An offer may be transferred from one member to another and, as long as that offer is continued for the same account, it shall retain the same priority, parity and precedence it had at the time it was transferred.

III(P). "Sale or Cancellation of a Bid or Offer Entitled to Priority Clears the Floor"—Following a sale or the cancellation of a bid or offer that had been entitled to priority pursuant to this rule, all bids and offers previously entered are deemed to be re-entered and are on parity with each other. For example, assume that the market in XYZ is 0.20 bid for 5000 shares, with 5000 shares offered at 0.25. On the bid side of the market, Broker A is bidding for 1000 shares and has priority. Brokers B, C, D, and E are each bidding for 1000 shares, with B being ahead of C, C being ahead of D, and D being ahead of E. On the offer side of the market, Broker F is offering 1000 shares and has priority. Brokers G, H, I, and J are each offering 1000 shares, with G being ahead of H, H being ahead of I, and I being ahead of J. Broker K enters the Crowd and sells 1000 shares to Broker A's bid of 0.20. The market then becomes 0.20 bid for 4000 shares, with 5000 offered at 0.25. Brokers B, C, D, and E are now on parity on the bid side of the market, and Brokers F, G, H, I, and J are now on parity on the offer side of the market.

• • • Supplementary Material: ------------------

.10(P) Precedence of bids and offers.—The following examples explain the operations of Rule 72 [¶2072] in connection with auction market transactions:

***

.20 Splitting.—When two or more bids on a parity have an opportunity to "match" for a lot of stock, the members making such bids may, by agreement, "split" the lot among themselves unless any other member in the Crowd objects. The same principles apply to offers.

For example: A bids for 200, B for 200, C for 100. A and B are on a parity. D offers 200. A and B may agree to "split" the amount offered and take 100 shares each, unless C objects, in which event A and B must "match" for 200 shares.

.40 Rule 72 does not apply to bonds traded through ABS® (See Rule 86).

------------------

Amended: August 16, 1988; October 26, 1992; December 15, 1994; May 28, 1998; August 30, 2000 effective August 28, 2000 (NYSE-2000-22); December 21, 2000 (NYSE-99-24); July 18, 2002 (NYSE-2001-18); July 29, 2002 (NYSE-2002-12); February 4, 2004 (NYSE-2002-32); March 4, 2005 (NYSE-2004-61); December 14, 2005 (SR-NYSE-2005-87).

 

[Hamlet]

Quote from jimrockford:

NYSE Rule 72, at http://rules.nyse.com/nysetools/Exc...e=chp_1_3&manual=/nyse/nyse_rules/nyse-rules/, disproves Hamlet's assertions as follows:

Why did you type asterisks to replace paragraph 'I(a)' ???

That is the paragraph that shows you are wrong, that's why.

 

[jimrockford]

Quote from Hamlet:

Why did you type asterisks to replace paragraph 'Ia' ???

That is the paragraph that shows you are wrong.

The paragraph to which you refer does not show that I am wrong. I presented only those paragraphs which show that you are wrong. I used asterisks to denote paragraphs not relevant to proving that you are wrong. I hope that this will motivate people to take a look at the NYSE website, where they can see the much longer and much more complex entirety of NYSE Rule 72, and study it, and understand it, and improve their trading, and make informed decisions about whether or not to continue trading on NYSE.

Anyone who takes the time to study NYSE Rule 72, including the paragraph you mentioned, will recognize that you are wrong.

I previously traded with specialists, learned from my experiences, and decided to stop trading with specialists. You lied when you said that I am blaming specialists for my trading problems, which is impossible since I stopped trading with them. You lied when you said I was dishonest about this fact.

 

[Hamlet]

Quote from jimrockford:

The paragraph to which you refer does not show that I am wrong. I presented only those paragraphs which show that you are wrong. I hope that this will motivate people to take a look at the NYSE website, where they can see the much longer entirety of NYSE Rule 72, and study it, and understand it, and improve their trading.

The paragraph that you deleted is the one that states the time priority.
Nice try.

 

[jimrockford]

Quote from Hamlet:

The paragraph that you deleted is the one that states the time priority. Nice try.

Wrong again, Hamlet.

Here is proof.

Your favorite paragraph says:

Priority of first bid

(a) Except as provided in paragraph (b) below, when a bid is clearly established as the first made at a particular price, the maker shall be entitled to priority and shall have precedence on the next sale at that price, up to the number of shares of stock or principal amount of bonds specified in the bid, irrespective of the number of shares of stock or principal amount of bonds specified in such bid.

The paragraph you mention, from NYSE Rule 72, identifies situations in which orders compete on a time priority basis. The following paragraphs, which I have already posted, identify other situations in which orders compete on a size priority basis, even though this sometimes gives a larger order priority over a smaller order which arrived first. The following paragraphs also identify situations in which orders arriving at different times are given equal priority (called "parity").

This proves that I was correct in my earlier postings, when I said that sometimes, NYSE rules prioritize earlier orders equally to or worse than newer orders of equal or larger size.

Anyone who takes the time to study NYSE Rule 72 can verify that you are wrong and that I am right. The task of understanding this rule is probably a very difficult one for the average trader. If I can do it, why can't you do it? Doesn't this situation contradict your claim to have superior knowledge of the rules?

Quote from Hamlet:

You need to learn the rules; how can you enter a trading arena without knowing the rules? Don't be like Mr. Rockford.
***
All of you guys who think the spec is out to get you and takes pains to screw you do not know the rules and characteristics of the exchange (besides having very wild imaginations, judging from your stated interpretations of the scenarios you describe here; seen any black helicopters lately?). I suggest you get an education before your next trade.

 

[Hamlet]

Quote from jimrockford:

Wrong again, Hamlet.

Here is proof.

Your favorite paragraph says:



The paragraph you mention, from NYSE Rule 72, identifies situations in which orders compete on a time priority basis. The following paragraphs, which I have already posted, identify other situations in which orders compete on a size priority basis, even though this sometimes gives a larger order priority over a smaller order which arrived first. The following paragraphs also identify situations in which orders arriving at different times are given equal priority (called "parity").

This proves that I was correct in my earlier postings, when I said that sometimes, NYSE rules prioritize earlier orders equally to or worse than newer orders of equal or larger size.

Anyone who takes the time to study NYSE Rule 72 can verify that you are wrong and that I am right. The task of understanding this rule is probably a very difficult one for the average trader. If I can do it, why can't you do it? Doesn't this situation contradict your claim to have superior knowledge of the rules?

I wonder if you are new to the English language?

Please read the section again, and after some time, I suspect, that you will conclude that you are making a fool of yourself.

Lets also see if you are honorable enough to apologize.

 

[Hydroblunt]

Quote from alanm:

Quote from Hydroblunt:
during the mid-1990s the IBM guy tried to claim greatness and honorability when the company stock was gapping down over 10% due to missed earnings. He took in smth like half a mil shares of a 2 mil opening print (dont quote me on the numbers). He was up several points in a half hour. Lot of ppl & institutions were pissed since the gap down was obviously overexaggerated so that the NYSE scum could make a couple easy mil.

What would have stopped you? If he opened it at say 83, and had to buy 500K shares to get it opened (a huge trade, even for a spec), it's because there weren't any better bids to offset the imbalance. What would have stopped you from bidding 84? Why isn't this just simple supply/demand?

No, because whenever the specialist takes any real position in a stock like that, he ALWAYS makes a great trade. It's very hard not to, he knows more order flow than any other market participant. In that particular situation, a lot of institutions were pissed and pushed for a full scale investigation because even before IBM opened, there was some question as to why it was opening up so low. A lot panicked as the opening indication kept going lower and ended going market instead of limit to ensure execution.
Don't forget, price improvement is actually one of NYSE specialists tools of manipulation, opening prints grab market orders and just push the price through to whatever level the specialist sees fit. Now if he prints 83, just because you had a bid at 83 1/8, does not mean you get anything. This occurs on a daily basis and always has.
The print was overexaggerated but at the same time, it was an NYSE stock and all those investors & traders sending in block orders market are giving the specialist their orders to do whatever he pleases. That's why to traders not familiar with NYSE it seems completely absurd that the Big Board is run like that. It's an obvious conflict of interest, with its structure, situations like that simply shout out to the specialist "Please take my money". Ideally, the opening print should have been within a reasonable range from where the price ended up settling 30 min after trading action started. That was the argument of the institutions & investors, since that what NYSE tries to promote as the value of the specialist, a fair and orderly market as opposed to the Nazcrack.
It's a very interesting article, you can easily find it. There were some other ones I found before, where a small fund caught a specialist blatantly pennying their offer so that he can make a quick few grand and leave the institution out to dry when their order should have been filled. This is regular stuff to daytraders, but when the funds got pissed, NYSE listened.
BTW, the Hybrid is actually a delay tactic before going fully electronic. Vast majority of the financial community would turn NYSE into Nasdaq overnight, especially the top tier trading firms.