Observations on the NYSE specialist.

[jimrockford]

Moderator,

I believe that my last posting, quoting from Hamlet's words with no additional commentary, was not only on-topic, but also of great value and great necessity to readers trying to figure out whether to rely upon Hamlet's claim to possess superior expertise backing his assertions about NYSE procedures (I don't make such claims of superiority). I acknowledge, at the same time, that in combination with the last few pages leading up to my last posting, it must be extremely embarassing for Hamlet, but I think this embarassment is something he brought upon himself by his own actions, and that it is more important that ET readers not be misled. If you tell me that my posting stepped over the line, then I will certainly take it as a learning experience as to where you draw the line, so that my future conduct will conform to your expectations, even if the particular posting in question did not so conform.

If you recall the definition you gave of the term "off-topic", so that we will know where the line is drawn:

Quote from ChaosNSX:

Agreed lets define it.

OFF-TOPIC...

This definiton will contain 2 key parts to its identification.

1. The post violates any of the Code of Conduct
http://www.elitetrader.com/conduct_rules.cfm

2. Does not have a central theme, or observation that does not directly link back to the essense of the original thread title.

These are the two criteria that base my definition for off topic.
Feel free to disiminate and quote this post to other users so they are aware this has been defined and should be practiced.

I think it is very clear that my last posting did not offend either one of the two criteria in your definition of "off-topic". I think Hamlet is upset, understandably, because he has "hoisted himself on his own petard." I hope that in evaluating my last posting, you will also look at the context of the several pages of debate which preceeded it. I will be completely attentive and obedient to any determination you make.

I think your intervention has had a great beneficial impact on this thread and I thank you for it.

 

[Hamlet]

Quote from Hamlet:

I must point out here (in keeping us all honest) that I have not seen anyone "so vociferously" claim that long sells can have priority over shorts. Perhaps Rockford has honestly mistaken the exact definition of the word, but whatever the case I wanted to make that clear.

What I had said, as did another poster, is that I am relatively certain that long sales are given priority over short sales. This statement was made on our parts based on our real-world experiences. In my case that experience is extensive, and I also remember reading it somewhere some years ago however I have not been able to find anything hard to post on it here. A third person on the thread also spoke in the affirmative on this but a fourth (who claimed to be an ex-specialist) said that it was not the case. For that reason, I clearly said multiple times (please reference my posts) that I am willing to leave this open to debate.

I'd also like to call a challenge to participants of this thread to speak of the facts as they are and to be as honest and straightforward as I have tried to be when it comes to issues that they cannot readily confirm.

With all that being said, I look forward to seeing if someone can provide some hard evidence on this issue one way or the other.

There is no embarrassment whatsoever. You can read from this posting of mine from earlier today and similar postings made to Don Bright and Dan over the past several days that the question of long vs short sales (priority) is in my mind not settled and open to debate . As far as I am concerned it is still open and when I see firm proof I will acknowledge the truth no matter which way it goes.

This sort of childish behavior and "I told you so"'s (whether true or not) does not belong on ET. I am certain this sort of behavior and attitude as exhibited here now are not the reasons for the recent recognition that this Forum received in Barron's.

 

[jimrockford]

Hamlet,

I suggest we close the dispute and move forward from this point, before any further damage is done to the participation on this thread. Agreed?

 

[jimrockford]

Dan,

I just found some more interesting info relevant to the great debate over your partially filled short sale.

NYSE Rule 123A.10 says:

.10 Limited orders—Market orders.—If a member gives a specialist an order to sell stock at a limit and thereafter the specialist receives another order to sell at the market, the specialist must execute the market order below the limited order, unless he can execute them both at the same price. The same principle applies to orders to buy.

Here is the lesson I get from this rule.

I previously suggested that your order partially filled, and its remaining balance sat unexecuted while 40,000 shares executed at your price, because either (A) lower price limit sell orders, or (B) market orders, took price priority over your order, even though they executed at your order's limit price. NYSE Rule 123A.10 eliminates hypothesis (B), leaving us only with (A). No market orders could not explain what happened, UNLESS the specialist broker the rules. If the specialist followed the rules, then only lower priced limit sell orders could have stepped in front of you by asserting their price priority.

 

[Hamlet]

Quote from jimrockford:

Hamlet,

I suggest we close the dispute and move forward from this point. Agreed?

The point of closing the flaming and moving forward was already previously established by the moderator days ago. There was not a "one more time" provision.

The moderator issued a serious warning and backed it up by saying that he was indeed serious. I truly hope that he stands by those words, and shows that he will not tolerate this insolent disregard for his authority.

 

[jimrockford]

No flaming here. No violation here. No insolence here. No disregard for authority here. Please, let us close the dispute and move forward. Thank you for your attention to this request.

 

[bitrend]

Thank you Mr. Rockford. However, this solve only once the order is recorded in the book. It's still not clear when the book is empty and 2 orders (long, short) coming at the same time, it seems the specialist prefers to take the long before the short.

Quote from jimrockford:

No flaming here. No violation here. No insolence here. No disregard for authority here. Please, let us close the dispute and move forward. Thank you for your attention to this request.

 

[alanm]

Well, you lost my interest again.

I know, BFD.

Maybe someone will post a summary when y'all figure out and agree on the rules. I'm betting July 2007 in the pool.

 

[jimrockford]

Quote from bitrend:

Thank you Mr. Rockford. However, this solve only once the order is recorded in the book. It's still not clear when the book is empty and 2 orders (long, short) coming at the same time, it seems the specialist prefers to take the long before the short.

I disagree, bitrend.

I think the rule is clear in all situations. Long sells receive no priority over short sells, on NYSE, outside of MOC orders, in either their entry into the specialist limit order book, OR in their execution.

Execution of short sell orders takes longer than that of long sell orders, not because long sells have priority, but because short sells are re-priced tick-by-tick, to the extent permitted by their tick test, so that each time a re-pricing occurs, the order is last in line at its new price level.

 

[Hamlet]

By the way, I do believe firmly that any trader had better make sure he is prepared ten times more then he thinks he needs to be if he wants to succeed in this business. That includes understanding the rules and learning the nuances of each arena and product that he touches. It is well known that there is a very high failure rate in this business, and telling it like it is a big help not a hindrance. Ask anyone who has been around and paid their dues. They will all tell you it was a hard climb and not without tons of effort.

I am not here to anal-yze the rules. I offer what I know and it comes from my experience. If people here want to anal-yze it and shoot it down so be it. Perhaps this is not the best forum for me to try to give back something to the trading community at large.

I stand by everything that I said. If I am shown to be wrong, I will acknowledge it. Recognizing when you are wrong and acting on it is one of the key lessons one must learn to succeed as a trader. I seek truths, not correctness.

Good Luck to All.