Observations on the NYSE specialist.

[kowboy]

Quote from Hamlet:

This is open to debate, but my immediate statement was that the 200k seller was given priority because he was a long seller while Dan was a short seller.

It is also open to debate it seems, as to whether longs are given or are supposed to be given priority in some or any circumstances. We have had some conflicting opinions on this here. Myself, Rubberbird, and the moderator have stated that they believe it is true, while ctsu said that it is not. My own and Rubberbird's statement's were made based on our own personal experiences of this being the case. It seems the jury is still out, but I expect the truth will come out of this either way.

For any definitive conclusions, we would need to know the answer to these questions. Is the order earmarked or tagged as a short sell when submitted from the broker to the specialist or is it sent neutral of long or short?
Are longs indeed given precedence to shorts?
Thirdly, it appears that Dan's order as well as the 200k order were both book orders and not floor orders. As cstu explains, that floor orders may be viewed as distinct and seperate entities. But if the 200k was a book order, some explanaiton is needed as to why Dan's order was not filed.

It seems imperitive that these be known before any precise conclusion be taken. How can this be found out?

Thanks, Mike

 

[Hamlet]

Quote from kowboy:

For any definitive conclusions, we would need to know the answer to these questions. Is the order earmarked or tagged as a short sell when submitted from the broker to the specialist or is it sent neutral of long or short?
Are longs indeed given precedence to shorts?

It seems imperitive that these be known before any precise conclusion be taken. How can this be found out?
Thanks, Mike

It is absolutely mandated that all sell orders be marked as either Long or Short. These orders must be handled differently for a number of reasons.

As far as the long sale priority issue, some digging needs to be done to offer hard evidence, but my understanding of it is as I stated. If I find out this is wrong I will post that info.

The fact remains though that it is my firm contention that a floor broker could not have simply stepped in front of Dan based on size priority, putting 200k on the offer and effectively shutting Dan out, as Rockford suggested all over this thread.

The fact that, as you stated, the 200k order appears to have shown up on the book adds further weight to this.

 

[kowboy]

Ok. Except if the 200k order appeared after Dan's order, then the 200k order was given precedence to Dan's. And I think what Dan was saying is that he was there first and getting some fills before the 200k order showed up on the offer. I think Dan said the 200k showed up after Dan placed his order.

Thanks, Mike

 

[Hamlet]

Quote from kowboy:

Ok. Except if the 200k order appeared after Dan's order, then the 200k order was given precedence to Dan's. And I think what Dan was saying is that he was there first before the 200k order showed up on the offer.

Thanks, Mike

That is correct. He was partially filled before the 200k showed up, then not filled on 40k shares subsequently traded at the same price after it did.

A clean cross trade can acomplish this. That is when a broker is doing a trade between two of his customers without going through the specialist. But since this 200k showed up on the book and the following trades were not done in one transaction, we can safely rule that out.

 

[kowboy]

Quote from Hamlet:

That is correct. He was partially filled before the 200k showed up, then not filled on 40k shares subsequently traded at the same price after it did.

A clean cross trade can accomplish this. That is when a broker is doing a trade between two of his customers without going through the specialist. But since this 200k showed up on the book and the following trades were not done in one transaction, that would rule this out.

So the sequence could have been that Dan placed his order for 15k short. Dan gets partially filled for 3300. Then 200k shows up on the offer. Then 40k show up as prints, which could have been somewhat delayed prints form a clean cross trade. Then the stock tanks 4 cents. But as cstu said, the floor trades are separate from the book ( but reported as prints)

How would we ever know exactly what happened, except that Dan probably would have like to have been included in the shares that were cross traded?

That being the case, I can see why Dan would want an explanation. And only hypothesizing here, that floor trades can take place outside of the book.

Thanks, Mike

 

[Hamlet]

Quote from kowboy:

So the sequence could have been that Dan placed his order for 15k short. Dan gets partially filled for 3300. Then 200k shows up on the offer. Then 40k show up as prints, which could have been somewhat delayed prints form a clean cross trade. Then the stock tanks 4 cents.

How would we ever know exactly what happened, except that Dan probably would have like to have been included in the shares that were cross traded?

Thanks, Mike

We know that it cannot be a cross because Dan indicates that the there are multiple trades which show up on the book as bids at his price. If there was a cross, it would be in one print and it would not show up on the book.

I mentioned the cross trade just to throw out there that it is the only time that a trade can go ahead of the book. Also, a cross trade must be designated as such on the tape, so anyone watching will know immediately.

 

[kowboy]

I'm on the edge of my chair with suspense. So what is your theory as to what happened as to why Dan did not get filled?

 

[jimrockford]

I believe two different scenarios are consistent with what we learned, or should have learned, from cstu.

#1. A floor broker stepped in front of the book on the basis of size priority overriding time priority, so that Dan stopped getting executed and the floor broker took over.

OR

#2. A number of floor brokers asserted parity with the book, without regard to either time priority or size priority, so that Dan and each one of the floor brokers got equal shares of the available liquidity.

Here is the proof that long sales take no priority over short sales. Such a priority, if it existed, would be legally mandated to be authorized by a NYSE rule. No such rule exists. I checked. You should check the rules, too. This proves that no such priority exists. It will be impossible to provide any further proof. How do we prove that the planet Saturn does not have an invisible moon made of green cheese?

This has been confirmed by the only person in this discussion who has first-hand knowledge, cstu, the former NYSE specialist. He related that brokers give bogus explanations, like "longs ahead of shorts", in order to get rid of disgruntled customers unhappy with their missed fills. None of the experts on this thread actually know anything; they are only relying on other people who claim to know something. Except for cstu, who actually does know something. Cstu also explained that the people not accepting this are simply unwilling to listen.

 

[reg]

Quote from jimrockford:


None of the experts on this thread actually know anything; they are only relying on other people who claim to know something.

The above statement certainly applies to you.

Actually, there are people who actually know something who refuse to share any knowledge with a blowhard like you since giving you advice is like talking to a rock.
Maybe next time a little humility is in order?

 

[Hamlet]

Quote from kowboy:

I'm on the edge of my chair with suspense. So what is your theory as to what happened as to why Dan did not get filled?

I cannot think of any reason that the 200k order could have been given priority other than that it was a long vs. Dan's short order.

I am sure that a floor broker could not have shut Dan out due to size. Even if the 200k order was given some sort of parity as Rockford suggests, Dan's order would have participated rather than being completely shut out.