MMs are interesting folks. This is what the NASD thinks of the MMs that govern the NASDAQ and how they are supposed to act. Whats your thoughts?
"The hallmark of the NASDAQ Stock Market is its network of competing dealers known as Market Makers. NASDAQ market makers include some of the largest and best capitalized securities firms in the world. In all , there are more than 470 Nasdaq market makers located in 38 states, the District of Columbia. and the United Kingdom."
"MM openly compete for investor orders by entering prices at which they are willing to buy and sell securities over the international network of Nasdaq trading terminals (GET DVGd, it would save you money). With an average of 11 MMs per Nasdaq security, this competition works to the benefit of investors in the following ways."
"First, competition among MMs produces efficient pricing and provides the market with the capacity to absorb large increases in volume--without the trading halts that are common to the exchanges."
"Second, independent academic studies have found that Nasdaqs competing dealers provide greater liquidity than that offered by the single specialist system of the exchanges. (Liquidity is generally defined as the dollar volume of trading required to effect a change in the price of a stock. The higher the dollar volume required, the more liquid a stock.)"
"Third, multiple mms commit more capital to making markets than exchange specialists."
"Fourth, unlike exchange specialists, MM firms frequently issue research reports on the companies in which they make markets. This activity greatly increases the visibility of a stock among investors.
"Finally, most Market making firms have retail departments that merchandise securities in which they make markets. Exchange specialists, because they have exclusive franchises, are generally prohibited from handling customer accounts and thus lack this distribution network"
Seth |
