SpecialistMan - by John Bogle

Quote from chasinfla:


As for the 'electronic-ization' of the markets, the gadgets are just tools. Markets are and always will be all about people. Eliminate the participants, and you eliminate the market.
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The "people" in the market are those who buy and sell. They will always be there. So yes, there will always be "participants" in the market (the buyers & sellers), but there may not always be human middlemen who need to touch each order.

There used to be human operators on elevators. When you got on, they would ask you what floor, then close the outer door, then close the metal gate. Then the operator would turn a wheel to go up or down. When he would come to the floor, he would usually overshoot it and then have to reverse to drop down a couple of inches and maybe back up an inch - all so the passengers would not trip on the mismatch between the elevator floor and the doorway.

Of course now days its all electronic - just like the markets could be.
 
Quote from chasinfla:




For all the difficulties I've had with the specialist system, I think shneed says it well. I've criticized the system, but I've also said I would not want it done away with.

The only time I've really been stomped by a specialist is when I've competed with him head to head. Doing that is a bad bet since he makes the market, he has the edge, and he's out to win just like I am.

I've written elsewhere that the specialist system can be likened to an insurance policy against bungee rides like EMLX in the summer of 2000. Insurance comes at a cost, and the premium is paid to the risk taker -- the specialists.

Competition works and will continue to refine the markets. Some trades are better done on NAZ, and some on NYSE, and others can be done anywhere. And the jury is still out on what this business will be like in 5 years.

As for the 'electronic-ization' of the markets, the gadgets are just tools. Markets are and always will be all about people. Eliminate the participants, and you eliminate the market.
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I have to agree 100% with your statement with the NYSE I sometimes feel like....... oh my i am being screwed by the specialist but then imidiately i realize that that is the name of the game. What you mention about EMLX bungee ride is totally truth.
 
What is etrade's default route for limit orders on NYSE stocks ?

Quote from howardy2k:



i have seen other traders pick me off for 5 cents or more on many occasions when price improvement on the nyse leaves me hanging at the high bid on the regionals ( etrade doesnt route to the nyse except when ur giving up the spread)
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I wonder if ECN's could attract enough liquidity to diminish the relevance of specialist system? People who favor and believe they benefit from "personal service" can choose it and those that want an electronic auction and go that way. Then competition for business will guide the services. Whenever so much power (money) is concentrated - corruption occurs - on the NYSE or Central America - same thing.
 
Quote from vhehn:

i have been a supporter of and like trading the specialist system but i believe this fiasco has given those who want to end it the opening they need. i believe the specialist system is doomed now. it will probably take a year or two but if i owned a seat on the nyse i would sell it fast.
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I beg to differ my friend, and will guess quite to the contrary. I mentioned in another post that the AMEX (with their "hybrid" Specialist system) will likely be trading all the Nasdaq stocks. I am meeting with the Amex people in my office in 2 weeks to discuss how they should handle opening orders (not that my input will alter their process, it seems that they just want input from a firm that trades a zillion shares on the opening.....Or else they've been reading my posts on ET.....either way lol).....

Changes will happen, yes, but elimination of a single place market probably won't happen....heck, someone has to take the risk and put the off-hour orders in their proper sequence.

If we go 24 "live" electronic, either ECN or MM, what happens when a major event happens....all the ECN's will be quiet (no one wants to take undue risk), and the MM's will take lunch for a couple of hours (or days).

Just my thoughts.....

Don .....
 
Don, you make it sound like the speciliasts will step in when a 3 sigma event happens like sept 11th. Yes, they will buy 1000 shares every $1 down. thousands of screens around the world will beat out the Labranches and SLk's when it comes to maintaining order.
 
When "big" events occur, don't let the NYSE propoganda let you think for even a minute that the Specialist will be there to "stabilize" the market place, and be the last person to buy or sell. That is bunk ! Specialists are there to make money for themselves, period. Anyone who thinks Specialists are there to maintain order, ahead of profits, seriously needs to get their head examined. This is an 'ol boys club perpetuated by both the NYSE and Specialists clubs. It is a rich fraternity, who wants to preserve its existence. It will take someone of very strong character to "bust the union". I'm not optimistic, but one never knows.
 
Quote from bent_prop:

I wonder if ECN's could attract enough liquidity to diminish the relevance of specialist system? People who favor and believe they benefit from "personal service" can choose it and those that want an electronic auction and go that way. Then competition for business will guide the services. Whenever so much power (money) is concentrated - corruption occurs - on the NYSE or Central America - same thing.
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well if the amex's actions are any indication then i am sure that the "specialist" will do everything in their power to take the ecn's out of the picture like they did island on the qqq's.
 
Some of you might remember what happened during the crash of 1987, when the only trades that were getting executed were on NYSE. If you had Nasdaq stocks, you were out of luck. Granted, because of ecn's and some new rules it has gotten easier to trade Nasdaq, but in a grand scheme of things in my opinion ecn's are mostly used by the market makers to try and manipulate the price of stocks to better execute their orders. While you certainly will get a faster fill on your order, it doesn't mean a thing. There is much more noise on Nasdaq vs NYSE. For every dirty trick that the specialist can utilize to his advantage there are 5 that could be used by the market makers, and then multiply that by the aggregate amount of market makers. Don't forget, when an institution wants to get a large block of stock on Nasdaq they don't send their order to an ecn, they send it to a market maker that they have a relationship with. In the end it all comes down to if you found some kind of an advantage to use to make your trading better. I traded Nasdaq for years very profitably, but graduated to NYSE. Believe me if you can trade Nasdaq, NYSE will be 10 times easier. NYSE is run by an old boys club who are a bunch of thieves, of course it is. Now show me one market maker whom you consider a decent human being.

shneed
 
Quote from GATrader:

Don, you make it sound like the speciliasts will step in when a 3 sigma event happens like sept 11th. Yes, they will buy 1000 shares every $1 down. thousands of screens around the world will beat out the Labranches and SLk's when it comes to maintaining order.
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More likely scenerio is that they would halt trading due to a "curb" on the Spoo's, wait for things to sort themselves out somewhat. Don't get me wrong, I don't think any of them ar Saints, it's just that a single location for trading makes it easier to halt. We've all seen the nightmare roller-coasters on OTC stocks in the past.

And, while waiting for another catastrophe, I would prefer to trade where I can see what's going on a bit better. But, to each their own.

Don
 
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