<OT> *Important update*. Recently I wrote a post about the games MMs play. One way in which MMs are able to deceive traders, is by not execting orders for the full size, even though they may have the size available. This does several things: hides the true number of shares the MM has available, cheats traders of fills that are due them, and deceives the market by hiding true demand. I encounter this situation virtually every day; I put in an order for 1K, but only get 100 shares because the MM displays the minimum 1 (100 shares), while in reality he's got the shares to give me, but chooses not to - so that they can keep displaying a certain price... which deceives investors into thinking the demand is less than it is (on a buy), while simultaneously denying the trader the shares due him/her.
Apparently, the SEC is going to try to amend this situation to a degree:
nasdr.com
This is courtesy of Nick Nelson on the Datek thread.
Of course, several things will happen. MMs will ignore the rule whenever they can - as they already often do with the Manning rules for price and size display (illegal, but happens all the time). Second, they'll find loopholes and ways around the rule. So, this is not a cure for this particular disease (bad fills), but it will hopefully make the MMs work just a little harder when the are scamming traders/investors.
Morgan |
