Here is another example why Porter's input is so valuable. He tells it like it is and the TSE doesn't like this stuff disclosed in public. The public should know that this is going on.
This is from October 23, 1997, Post #711.
"Options update for 23 October...I couldn't make this up if I wanted to
If any of you wonder why I rant and rave and carry on like I do about somewhat
technical matters you should consider for a moment the opening on NTL on the TSE
today. OK...S&P futures down the 15 point limit pre-opening, the market looking like a
sewer...NTL indicated to open at $130.50 Cdn, last close $135.50. With me so far? A
severe drop, but not out of line. Well, at the *last* instant, a broker entered an order to
buy 25,000 NTL at the market. (Whether or not it was an attempt to 'scoop', I don't
know, but I strongly suspect so.) So, the TSE system (remember, an order-driven
system) performed its job exactly as it was programmed to--it found the level at which
buyers and sellers were matched and voila!...NTL opened at $135.60!!!Please re-read
that last sentence so you understand exactly what happened. NTL opened *up* .10c.
Meanwhile, it opened on the NYSE at the equivalent of $130.80. (You remember the
NYSE...that's where they have human beings that can think and react and make
competent decisions). So, what does the TSE do? According to their lights, the system
performed perfectly by matching up buyers and sellers at the price that filled all orders,
but...there was the embarrassing $5 discrepancy. Hmmm, what to do? On the one
hand, you can't admit your system fucked up, but on the other hand, it was a 1.25
million difference of opinion. So after some head-scratching and a cup of coffee, it was
decided by the heavy thinkers at Market Integrity (no oxymoron intended) to *deus ex
machina* change the opening price to $131.40. People, you can't have it both ways.
Either you commit to an order-driven trading system (as the TSE has) or you rely on
professionals who are accountable to line up orders and ensure a fair price. (By the
way, a similar opening occurred in ABX yesterday, but it was only .50c on 10,000, so
the client only got screwed for $5000 so I didn't bring it up). I sincerely hope someone
who got a report that they sold NTL at $135.60 on the opening today and later had it
changed to $131.40 sues the TSE. Someone has to make these clowns sit up and smell
the coffee.
You might ask what this has to do with options. Fair question. The TSE is planning to
bring an 'order-driven' system in when fully automating derivatives in Toronto. If this shit
can happen in NTL, and as I posted a few days ago, in BCE, two of the most
heavily-traded and followed stocks in Canada, what will happen to a market order to
buy Bell November 32.50 puts? Remember, we can't prevent anomolous (read: fucked
up) trades from occurring. Then we have to wait and see if the TSE comes in and
re-prices them? Don't make me laugh. I didn't grow up wanting to be a Nintendo trader
like in Milan or Stockholm or Sarajevo. I entered this profession to be a pro trader like
my father and grandfather in an open, visible market. Do we make money? Yes. Do we
lose money? Definitely yes. But we stand behind our markets and we can reason and
think and react...something no computer can do.
It's time people stood up and told the TSE that enough is enough. If the spirit moves
you, call Susan Crocker at the TSE or Andrew Willis at the Globe&Mail or the OSC or
your broker. Tell them you're tired of being jerked around. They think they can get
away with it. It's up to you to tell them they can't. I've done all I can. I'm tired.
Happy trading.
Porter" |
