DOMINICK AND UNDERDOG...
Everything you have said about SUPERSOES and preferencing is true.
I personally feel that SUPERSOES is slightly biased towards the big institutions, unfortunately. What it allows is stocks to essentially get 'whipped around'. If you think stocks are volatile now, wait until SUPERSOES is implemented. The suggested platform would be setup such that an MM or ECN is simply 'moved' out of the way once their execution is done. What will happen is that a large firm or institution will put in their order to buy 500,000 shares (although one point being argued is the MAXIMUM SOES order size allowed - currently suggested to be 99,999 shares) with an upper limit of say, $3 from that price. BOOM! According to what the institutions want (no time delay after execution) the entire MM book would be 'swept' level after level after level until the entire order was filled up to the limit price. I am not sure whether other order would be 'rotated' in for an execution in the mean time while the stock 'screams' higher.
Now... keep in mind that the SUPERSOES and decimalization debates are still going on. The ECN's have been against certain issues (price representation and queueing based on the fact that since they charge a fee, their ECN's would be essentially sent to the 'back' of the queue because it actually costs MORE to trade with them), the big institutional firms want NO delay (so when they have something to do they simply DO it), and the retail firms probably (though I don't know) want some type of time delay so their traders aren't overwhelmed by trying to put out fires ALL day because stocks would be whipping back and forth (many of these guys have big lists).
My opinion is that with no time delay in SUPERSOES the markets will become even more volatile then they have ever been. Also IMHO, the stock intraday charts will look like 'EKG' patterns of spike up, spike down, spike up, spike down, etc..
I will have more to say on this when they have announced whether they are going to put it in place or not (though Nazareth has suggested that they WILL) and what it will include.
All the best,
-- Gene |
