Info, I think we are on the same page, more or less. My main concern with any of these rules, is that they are not followed anyway. On some of them it is also hard to prove "wrong-doing". A further problem is the hassle factor. I've had situations where I could clearly see that my trade has been dealt with illegally by an MM, but I didn't bother disputing it, and pursuing, because of the time/energy required (especially, if the result wasn't a straight loss for me, but rather a loss of opportunity to make profits) - I'd rather move on and in general, try to stick to ISLD as much as possible. Many investors/traders don't even know anything untoward has happened. MMs know that of all the illegal stuff they do, they'll only get called on a tiny minority of them, and so, the amount they make by cheating is far greater than any penalty they may have to pay if they get caught - and in any case, most often all that happens is that they have to give a fill, or cancel a trade... I mean, what a setup - imagine you told a thief: the only penalty for stealing is you have to give back what you stole! Of course what will happen, is that they'll steal as much as possible, and from time to time give back a little if they got caught on one particular theft! Very occasionally, you'll have the SEC slap them on the wrist with some fine which will be settled. Whatever it is, represents pennies on the dollar, if that. There is not enough enforcement, and in fact it is hard to do enough policing with the present penalty regime - after all, who is going to examine every trade made in the market. What would work better, if the penalties were much more severe (immediate loss of license, huge penalties that materially hit them where they live, etc.) - at that point, all you'd need are spot checks, because the fear factor would keep them honest; a much more feasible enforcement mechanism.
Morgan |
