PanAmerican BanCorp (PABN) Message Board

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Microcap & Penny Stocks : PanAmerican BanCorp (PABN)

PABN 0.00001000

0.0%

Mar 7 3:00 PM EST

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To: PCModem who wrote (40066)	7/30/1999 12:51:00 AM
From: DSPetry	Read Replies (1) of 43774

Back to our regularly scheduled programm....interesting article forbes.com Trading around an order is one way for marketmakers to get stock prices where they want them. A former marketmaker says the following situation is typical: Say a marketmaker has an order to buy a stock that's trading at 47 bid, 48 asked. He has no inventory in the shares, but he shorts the stock to the customer at 48. (Big marketmakers can short stocks on downticks, unlike on the NYSE and the Amex, where the specialist can short only on an uptick.) Then the marketmaker drops his offer to 47 3/4, signaling to the other dealers in the stock that there's a seller out there. The market in the stock drops to 46 3/4 bid, 47 3/4 asked. The marketmaker who dropped his offer buys the stock at 46 3/4, covering his short and making $1.25 per share. Is this cricket, taking advantage of a fellow marketmaker? All's fair in this particular war. The harm to the public lies in unnecessary volatility.

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