Price Improvement on NYSE must GO !

I wholeheartedly believe what you are telling me. Why would a Specialist firm get involved in a low-liquidity issue, if it couldn't make money on it, even if it is a small amount ?

Yes, you are right about the low liqudiity issues. I trade them, because I feel comfortable with that style of trading. And although a belly-ache about price improvement (it hurts me a hack of a lot more than it helps me !), I still make a nice profit doing what I love. However, given the nature of the stocks I trade and the "price improvement nightmare" that I face each and every day, I believe that I making about 40 % below what I should be making (please don't ask me how I arrived at that figure :).

Although I don't know any Specialists personally, I have friends who do, and from what I hear, bending of the rules is part of the game. With Grasso getting expelled, perhaps things will start changing, even if it is a little bit at a time.

Thanks again for your views.
 
frequently "bundle" small limit orders together and fill them with "price-improvement" when a large order comes into the marketplace and PRINTS.

This happens with limit orders all the time.

I know this because I trade an NYSE name that does about 1 million shares per day with Susquehanna as the specialist making a market in only one OTHER stock besides this one.
 
Hayman,

I completely agree with your point about the specialist stepping infront of a limit orders by a penny. First I make less money because of the practice. The practice hurts the market, causes people not to use limit orders because you will only get filled in markets that are going against your position. Without as many limit orders spreads will widen and it will be more difficult to get fills good quick fills and it would hurt investors. It only serves to enrich the specialist by allowing them to front run whatever side of the book they think will be profitable or pocket the spread.

There must be a lot of specialist on this board, there sure seems to be a lot of heart felt support for specialists stepping in front by a penny.

I think a 3 to 5 cent rule would be fine.
 
Quote from shaq48:

Haymen,
The only time they didn't have a huge advantage was when the floor brokers show up. Personally I try to trade stocks that have a decent amount institutional action in them. This way if I can see a floor broker at work I have an edge.
More...

Can you explain how you see the floor brokers show up?
How do you see the floor broker at work, and what Avg Volume are you talking about?

thanks,

wercurna
 
Quote from egusc:

Hayman,

I completely agree with your point about the specialist stepping infront of a limit orders by a penny. First I make less money because of the practice. The practice hurts the market, causes people not to use limit orders because you will only get filled in markets that are going against your position. Without as many limit orders spreads will widen and it will be more difficult to get fills good quick fills and it would hurt investors. It only serves to enrich the specialist by allowing them to front run whatever side of the book they think will be profitable or pocket the spread.

There must be a lot of specialist on this board, there sure seems to be a lot of heart felt support for specialists stepping in front by a penny.

I think a 3 to 5 cent rule would be fine.
More...

Can you explain what you mean by the "3 to 5 cent rule"?

thank you,
 
I have heard on TV that there might be a new rule that if a specialist wants to step in front of a existing limit order to fill it with his own stock he would have to improve the limit order price by 5 cents or fill the existing order on the limit books.

The specialists are suppose to have a negative obligation, which always seemed to be a stupid term to me. The negative obligation is to step away from trading from their own account whenever possible and let actual traders trade.
 
That would certainly be a welcome rule. One can only hope. The BIG problem is that Specialist firms are public entities with profit motives being their first objective. If you take away their profit areas, you take away their business. Grasso, until late in his tenure, always played ball with the Specialist firms, and vice-versa. We need to break this 'Ol Boys Club apart, before welcome rules like this will be ratified. Grasso getting the boot is a major step in the right direction. We'll see how the new interim head makes changes, if any. He is pro-automation, which is a step in the right direction, but he'll still have to "bust the union" to get what we want.
 
Quote from hayman:

That would certainly be a welcome rule. One can only hope. The BIG problem is that Specialist firms are public entities with profit motives being their first objective. If you take away their profit areas, you take away their business. Grasso, until late in his tenure, always played ball with the Specialist firms, and vice-versa. We need to break this 'Ol Boys Club apart, before welcome rules like this will be ratified. Grasso getting the boot is a major step in the right direction. We'll see how the new interim head makes changes, if any. He is pro-automation, which is a step in the right direction, but he'll still have to "bust the union" to get what we want.
More...

Hayman,

I am honestly not trying to attack you seriously but i want to understand more about this NYSE thing.

What are you exactly looking for to be changed on the NYSE and how would that affect you?

I also trade NYSE and i do ok my biggest fear is that i all changes and i have to change everything i do, if it happens i will have to change my strategy no choice.

Again i don't mean to attack i just want to understand why people that trade the NYSE complain about NYSE. why not just trade Nasdaq.

Please give me some clarification since i am a little confused here.

Again no attack just very confused.

thanks,

wercurna
 
I am very upset about how price improvement (aka, pennying) is done. Specialists, in a variety of ways, step in front of market orders that are destined to be filled by best limit order. It is my contention that this "rule" is abused, particularly in the land of thin liquidity stocks (at least, it is more readily apparent with these types of stocks). As several posters suggested, rules that would require the Specialist to improve the price 3-5 cents, as opposed to a penny, would help curtail the abuse.
 
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