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SpecialistMan - by John Bogle
- Thread starter Tea
- Start date
Well, this will open up a can of worms. what will happen to all the market specialists, floor brokers and others. NYSE is much bigger than NASDAQ, and most institutions prefer to trade NYSE vs NASDAQ. The quality of stocks is much better. Somehow I don't see NYSE becoming another NASDAQ with its SUPERSOES, on the other hand the way the NYSE is structured now will certainly change. Most likely, they will allow more competing from ecn's, I don't know what good that will do since if I am a mutual fund wanting to buy 1 million shares of stock I would never place my order with ARCA, or instinet. In the long run, probably the changes that will happen will probably hurt everyone equally. Sort of like Communism. When ever someone steps up and proposes changes to help the common man, hold on to your wallet. Everything comes down to this, you either know how to trade and use NYSE structure to your advantage, or you complain how unfair it is and try to make sure that everyone else can't trade either. If trading was easy, no one would be making money doing it. Is NYSE structure fair? No way, but I make money every day through them. If you can't, you are not suppose to. When they change the structure of NYSE from specialist to whatever, I will figure out how to make money there, everyone who is complaining now will find some new reason to complain about it, and if your excuse is that Institutions are complaining too, since when do most institutions ever beat any kind of an average or an index over a long period of time, of course they are complaining, they need to have a scapegoat, so that their investors don't blame them.
shneed
shneed
while i agree with you for the most part, i think it's unfair to characterize it as boiling down to either being able to make money or not, via the specialist system, as the deciding factor in whether grievances are legitimate. the specialists are closer to a group of thieves than a group of saints. and while i've gotten used to trading listed stocks, i would certainly not call myself a supporter of the system, like vhehn. that i don't really understand. the NYSE has the stigma of an old boys club, and at a time when individual investors accounts have gotten rocked and the economy is a hot issue, you can expect some heads to roll. while it is true that the public just wants someone to blame for their losses, which is wrong, i don't think i really consider the NYSE a pure scapegoat. if things have to change toward a nasdaq model, i don't think i'll shed any tears over the death of the specialist system.
mr_minty
You may be right, on the other hand I don't think of Market Makers as a bunch of saints either. This is a zero sum game. The fact is, the reason that ecn's took away so much business from them, is because the were cheating so many people for so many years. entrepreneurial people saw that as a business opportunity and took advantage of it. That's what I am for, more competing from outside sources. If the specialist system has flaws that could be used by someone who can take advantage of it, I am all for it. If the powers that be legislate it so that more outside sources can compete for NYSE volume, great! Competition is always good. However, all the talk is centered around what amounts to throwing the baby away with bathwater. Right now my hope is that they would allow more entities to compete with NYSE. Most brokerage firms will not even allow you to send orders to regional exchanges. certainly you cannot do it through IB (not sure why, but it could be because they are a member of NYSE). All I am saying is that in my opinion, it would be better if they untied the hands of competitors vs outlawing the specialist system.
shneed
You may be right, on the other hand I don't think of Market Makers as a bunch of saints either. This is a zero sum game. The fact is, the reason that ecn's took away so much business from them, is because the were cheating so many people for so many years. entrepreneurial people saw that as a business opportunity and took advantage of it. That's what I am for, more competing from outside sources. If the specialist system has flaws that could be used by someone who can take advantage of it, I am all for it. If the powers that be legislate it so that more outside sources can compete for NYSE volume, great! Competition is always good. However, all the talk is centered around what amounts to throwing the baby away with bathwater. Right now my hope is that they would allow more entities to compete with NYSE. Most brokerage firms will not even allow you to send orders to regional exchanges. certainly you cannot do it through IB (not sure why, but it could be because they are a member of NYSE). All I am saying is that in my opinion, it would be better if they untied the hands of competitors vs outlawing the specialist system.
shneed
While for long term trading it doesn't matter whether it is a specialist or an electronic system, it DOES MATTER when you're trading through the day. In an open market, such as NASDAQ, it is much harder to be the axe in the stock. However, when its up to the specialist - he can play you like Yo yo ma the cello.
Another important thing: delayed quotes. If you're trading from anywhere but the actual NYSE floor, you may see a specialist quote that has already been excersized. That problem does not exist with the SUPERSOES or the new SUPERMONTAGE system. Sometimes some ECNs srew up - but that is due to minor electronical problems.
After all, in this day and age, how long do you think this system of a person matching orders will last. The Broad Street Building will be a museum soon.
Another important thing: delayed quotes. If you're trading from anywhere but the actual NYSE floor, you may see a specialist quote that has already been excersized. That problem does not exist with the SUPERSOES or the new SUPERMONTAGE system. Sometimes some ECNs srew up - but that is due to minor electronical problems.
After all, in this day and age, how long do you think this system of a person matching orders will last. The Broad Street Building will be a museum soon.
I have talked to them at IB and they said they had no interest from their clients to get to the regionals? Maybe you should ask them that you are interested in Regionals.
jeff--
jeff--
Quote from shneed:
mr_minty
You may be right, on the other hand I don't think of Market Makers as a bunch of saints either. This is a zero sum game. The fact is, the reason that ecn's took away so much business from them, is because the were cheating so many people for so many years. entrepreneurial people saw that as a business opportunity and took advantage of it. That's what I am for, more competing from outside sources. If the specialist system has flaws that could be used by someone who can take advantage of it, I am all for it. If the powers that be legislate it so that more outside sources can compete for NYSE volume, great! Competition is always good. However, all the talk is centered around what amounts to throwing the baby away with bathwater. Right now my hope is that they would allow more entities to compete with NYSE. Most brokerage firms will not even allow you to send orders to regional exchanges. certainly you cannot do it through IB (not sure why, but it could be because they are a member of NYSE). All I am saying is that in my opinion, it would be better if they untied the hands of competitors vs outlawing the specialist system.
shneed
Quote from howardy2k:
I would really like to see a rule change that will force the specialist to apply price improvements for all the regional exchanges and ecns.
no no no no no no no no no no
allowing the specialist to control the ECNs in ANY WAY would be a step backwards for the entire market
the better rule would be to force EVERYONE (even prop firms that cannot or do not trade listed stocks across ECNs) to provide ECN quotes along with the NYSE market -- and to force retail brokers to execute at that inside price despite the possibility of price improvement by sending the order to the floor
it's like andreson's old argument -- would you rather wait 30, 45, even 60sec for a print in a fast market MAYBE at a better price -- when you could get stock in 0.100sec and trade AT the posted market with a limit order???
i think part of the reason the specialist problem still exists is because most firms that trade listed do not route anywhere else...for several BS political reasons...but the carrot being dangled in front of everyone's eyes as "price improvement" is meaningless to most investors. plus how many times do you sit there waiting for the print and it happens at a lousier price than if you had been able to autoex the offer or the prick pennies you and rips the stock away from your price??
i see ISLD bids or offers superior to the NYSE market -- and they are also TRULY autoexecuteable -- all the time and they are rarely hit.