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Observations on the NYSE specialist.
- Thread starter oliver777
- Start date
Quote from ElatedMaverick:
If the guy was a go-along seller they would have both shared, but it looks like they didn't, plus it was on the offer so it wouldnt be a go along, or parity as u call it.
ElatedMaverick,
Why do you rule out the possibility that a "go-along" was NOT on the offer, and that the interest seen on the offer was NOT the go-along?
How would you interpret the following sections of the rule:
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.
Rockford, once again, the partial rule that you just posted in your response to EM gives the priority to the bid or offer as entitled to it under paragraph (a) based on time, which you conveniently omitted again.
That, and all of the evidence presented numerous times on this thread as well as the opinion of the person whom you appointed as the expert, and others, indicate that a floor broker CANNOT step in front of and size out the specialist book, as you claim was the case with Dan's order. I don't want to repeat it all again here, but I believe that this point has been well established.
If you can kindly post specifically what it is about this that you do not understand or have issue with perhaps myself or someone else can present it in more simple or specific terms.
To the moderator: I am hopeful that under your watchful eyes this thread can remain civil, and any attempts to point out misinformation and offer more correct answers will not be met with further accusations of it being harassement. I myself will do my part and resolve to make a conscious effort to keep all of my own postings on topic and if they should stray away, I welcome the notice if it being so. Thank You.
That, and all of the evidence presented numerous times on this thread as well as the opinion of the person whom you appointed as the expert, and others, indicate that a floor broker CANNOT step in front of and size out the specialist book, as you claim was the case with Dan's order. I don't want to repeat it all again here, but I believe that this point has been well established.
If you can kindly post specifically what it is about this that you do not understand or have issue with perhaps myself or someone else can present it in more simple or specific terms.
To the moderator: I am hopeful that under your watchful eyes this thread can remain civil, and any attempts to point out misinformation and offer more correct answers will not be met with further accusations of it being harassement. I myself will do my part and resolve to make a conscious effort to keep all of my own postings on topic and if they should stray away, I welcome the notice if it being so. Thank You.
Quote from kowboy:
Gosh almighty!! I have read this thread, and meaning no disrespect to you at all, would you please slowdown and re-examine the manner in which you recently posted?
When JR, cstu or others have posted what appears to their understanding of the facts which you disagree with, would you do us all the kind favor of responding by specifically correcting the facts as you see it. Instead of merely saying they are wrong. I feel you may have a lot to contribute to our understanding if we could get past the personal stuff.
Thanks a lot.
Mike
As soon as one of them can tell me the name of just 3 listed companies form the date the NYSE opened, I will respond to their arguements!!!!
They can not because there is only ONE still trading today and it will not trade forever and will eventually go under.
Which means that wealth is NOT created but merely transfered from player to player.
The arguement of dividends is a stupid one because the common phrase that is being discussed here is " TRADING is a zero sum game".
Quote from dwl603:
the only thing that I think these guys should be held accountable for is the number of shares they are allowed to steasl at a price level, this gets particularly annoying when you are trying to get short (non sho stocks, the is no way in hell you are getting the shares once the stock starts to move) and more shares get bought at your offer price then what is even showing on the level and he still wont even give you a share, this happens all too often when the stock is right about to take a nosedive and these guys are just flat out stealing when they do this.
Prime example today on F specialist starts filling my short order for 15000 shares I start to get my fill and manage to get 3300 of them and then some other guy slaps 200,000 on the offeer now I keep seeing bids come across into this 200,000 and I think I this is awesome im going to get my shares and have massive size behind me, after this I counted about 40,000 shares coming being bought at this level, the specialist never gave me another share and the stock went down 4 cents immediately after these shares printed. I know that these shares are being bought at this price it is not sell order price imporvement because I can see the bid coming across.
Does anyone know why this happens? or can anyone give any sort of justification to this if the specialist isnt flat out robbing me what is happening???
-Dan
This is Dan's exact description of what happened to his order. He immediately received an insulting response, and then understandably did not continue his participation in the thread.
It has been claimed that Dan had time priority under paragraph I.(a) of NYSE Rule 72, which covers priority of bids, and which is made applicable to offers by paragraph II.
A fact proving that Dan did not have time priority, under paragraph I.(a), is that the paragraph provides that in the event of a partial fill, which Dan did receive, the remaining unfilled balance of his offer immediately lost any time priority under paragraph I.(a). Paragraph I.(a) is very clear that the time priority it provides is only good for the first partial fill. It does not continue after the first partial fill. So this solidly proves that paragraph I.(a) did not give Dan time priority.
It is, of course, true that Dan always had time priority over any other orders in the specialist book. But this is not the issue. The issue is whether the specialist, in representing Dan's order, had time priority over all other floor brokers, who were not in the book, and the clear answer is no, he did not have time priority over floor brokers after his partial fill. Floor broker bids and offers are generally not part of the specialist book.
If any other NYSE trade executed at Dan's price, prior to the first partial fill he did receive, then this would also prevent Dan from receiving time priority even on his first partial fill. This is because paragraph I.(a) applies only to the first offer to establish a new price level. Any subsequent offers at that price level are governed by rules other than time priority.
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.
Professor Blume says:
Time priority
First-come, first-served is a time-honored principle that rewards prompt action. In the
present case, the first member to bid or offer at a price gets the first trade at that price.
Beyond that, there is no time priority. In a crowd, itâs possible to keep track of who was
first. Itâs more difficult to keep track of who was second, third, etc.
After the first trade at a price, all members bidding or offering at that price are said to be
at parity. This means that they have equal claim to all counterparty interest at that price.
And our former specialist, cstu, expressed almost complete agreement with Professor Blume.
Professor Blume wrote:
I believe the former specialist, cstu, expressed general agreement with Professor Blume, but let's hope he will eventually come back and clarify whether his agreement includes this particular point.
I hope we can all agree, at this point, that price-time priority governs only priority within the specialist's order book, and that it does not govern the relationship between the specialist book and the floor brokers.
The NYSE was founded in 1792 and first functioned as an open outcry market. In addition to the
basic features of these markets described in the last section, the NYSEâs procedures also
embodied the following principles.
***
Size precedence
This is a secondary priority rule. Normally, if A and B are both bidding $100 and are at
parity, they will share arriving sellers equally. If an order to sell 300 shares at the price
arrives, A and B will each buy 150 shares, or they might flip a coin for the whole amount.
But if A is bidding for 300 shares and B is bidding for 100 shares, A would get the full
amount based on size precedence. Size precedence is rarely invoked nowadays.
I believe the former specialist, cstu, expressed general agreement with Professor Blume, but let's hope he will eventually come back and clarify whether his agreement includes this particular point.
I hope we can all agree, at this point, that price-time priority governs only priority within the specialist's order book, and that it does not govern the relationship between the specialist book and the floor brokers.
Rockford, I'm afraid you are missing the whole point yet again. I will do my best to explain and break it down into simpler terms for you so that you can understand where you are wrong.
We are clear that Dan's order was the first on the book at his price, and he does get a partial fill. As he states, a 200k order later shows up there. After that point, Dan see several bids appear on the tape at his price, and 40k shares trade at his price in total of which he gets filled on none.
This proves that the 200k was NOT on parity with Dan's order.
CTSU, whom you have already attributed as being someone who know's things and an expert, has already confirmed this and in fact corrected you on this issue. Once again, here is that quote where he first quotes your incorrect statement and then goes on to correct it:
What ctsu, who you keep saying agreed with you, was actually saying here, is that there is no way that another order could have jumped ahead of the specialist book, but the best it could do was match. Since Dan did not participate in any further fill this was clearly not the case. It is plain as day and I'm not sure how to make it any more clearer to you, but if you need me to I will try. I hope others can join in here as well, and there were a few who I believe who also were in agreement.
The Prof. Blume comment which you keep citing is irrelevant to this, and in fact when you say that ctsu agreed with Prof Blume you are incorrect. What he actually said was that it was "pretty good and telling". Most importantly however, that comment was made prior the much more relevant comment which I quoted above where he in facts corrects your misinformation and lays this matter to rest.
I've done my best to break this down and make it clear for you over these past 20 pages Rockford, but if you need more explanation or breaking down I will be happy to oblige. My goal is that you understand this and that there is no further confusion which would be a disservice to the thread.
We are clear that Dan's order was the first on the book at his price, and he does get a partial fill. As he states, a 200k order later shows up there. After that point, Dan see several bids appear on the tape at his price, and 40k shares trade at his price in total of which he gets filled on none.
This proves that the 200k was NOT on parity with Dan's order.
CTSU, whom you have already attributed as being someone who know's things and an expert, has already confirmed this and in fact corrected you on this issue. Once again, here is that quote where he first quotes your incorrect statement and then goes on to correct it:
Quote from cstu:
Jim
I am not sure if my comments will actually help anyone in their trading but they should serve to lesson the blood pressure on occasion when people here think they are being ripped off.
"the ony selling interest which could have jumped ahead of Dan's short sell order would have been a newer floor brokers offers at the same price"
Not entirely correct. As I try to explain, and I admit the rules are rather arcane, this order can "large order" can never jump ahead on the specialist book. Also the best the larger order can do is trade on parity (after parity is acheived) by virtue of a match.
The only way this order can ever sell more than the specialist book or any other broker on parity is if the seller gets there own buy order that is greater than the total of all other offers. He can then cross his stock and shutout everyone.
What ctsu, who you keep saying agreed with you, was actually saying here, is that there is no way that another order could have jumped ahead of the specialist book, but the best it could do was match. Since Dan did not participate in any further fill this was clearly not the case. It is plain as day and I'm not sure how to make it any more clearer to you, but if you need me to I will try. I hope others can join in here as well, and there were a few who I believe who also were in agreement.
The Prof. Blume comment which you keep citing is irrelevant to this, and in fact when you say that ctsu agreed with Prof Blume you are incorrect. What he actually said was that it was "pretty good and telling". Most importantly however, that comment was made prior the much more relevant comment which I quoted above where he in facts corrects your misinformation and lays this matter to rest.
I've done my best to break this down and make it clear for you over these past 20 pages Rockford, but if you need more explanation or breaking down I will be happy to oblige. My goal is that you understand this and that there is no further confusion which would be a disservice to the thread.
I have always expressed the opinion that the 200K of selling interest, or any other sell orders arriving after Dan's order, did not have parity with Dan, and that Dan had priority over those sell orders. I have always expressed the opinion that the specialist book is strictly price-time priority, so that Dan had priority over the 200k. I expressed the opinion that the selling interest which executed with priority ahead of Dan, or executed with Dan at parity, was NOT the 200K which he saw on the specialist book. I have suggested that perhaps the trades reported after his partial fill were reported later in time, but may have resulted from selling interest on parity with Dan's partial fill.
Hamlet,
You once again inaccurately described my statements. Please kindly stop presenting what you think I said. Please kindly allow me to speak for myself. The topic of the thread is "Observations on the NYSE specialist." The topic of the thread is not "Proof that jimrockford said something wrong about the NYSE specialist." The topic is not "let's make jimrockford understand something." Please confine your dicussion to talking about the NYSE, and please do not talk about me. Thank you for your kind attention to this matter.
Hamlet,
You once again inaccurately described my statements. Please kindly stop presenting what you think I said. Please kindly allow me to speak for myself. The topic of the thread is "Observations on the NYSE specialist." The topic of the thread is not "Proof that jimrockford said something wrong about the NYSE specialist." The topic is not "let's make jimrockford understand something." Please confine your dicussion to talking about the NYSE, and please do not talk about me. Thank you for your kind attention to this matter.
Quote from 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.
These scenarios which have been proposed are not consistent with what took place or with anything ctsu said could have occured, since as ctsu said, a floor broker cannot step in front of the book, take over, and cause Dan to stop getting executed.
I described the reasons in the post above why these scenarios are wrong.
Perhaps market sell orders, or offers priced one cent or more below Dan's limit price, arrived and therefore had price priority over Dan, and that any such limit orders were executed before they could be displayed? Perhaps they received price improvement, so that they executed at Dan's limit price?
This would be consistent with what cstu said, that long sells do not get priority over short sells. And it would confirm my opinion that the 200K shares of selling interest, which Dan saw on the book, had nothing to do with the execution. Anybody?
This would be consistent with what cstu said, that long sells do not get priority over short sells. And it would confirm my opinion that the 200K shares of selling interest, which Dan saw on the book, had nothing to do with the execution. Anybody?