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Technology Stocks : Alteon WebSystems Inc-(ATON)

ATON 0.912

+0.3%

Jan 9 9:30 AM EST

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To: ladychristine who wrote (342)	11/1/1999 10:07:00 AM
From: Wayners	Read Replies (1) of 414

The MMs are of course governed by SEC and Nasdaq rules. They are required to provide a two sided market and act as buyers and sellers of last resort to provide liquidity to the market. They have to provide the liquidity function so that they are allowed to be collecting pretty risk free spreads by simply matching buyers and sellers and not actually holding stock themselves. In the Nasdaq National Market system there are supposed to be a lot of eyes watching the market makers. A lot of that is internal watching, self policing within Nasdaq. The SEC only has 400 people for enforcement, so things really rely heavily on the exchanges themselves for policing. The MMs are supposed to let normal supply and demand set their bids and ask prices. MMs typically just get warnings if the Nasdaq market notices they aren't providing a real two sided market with ample liquidity. MMs can come with all kinds of excuses for their bids and asks, so in reality MMs get a lot of leeway to do what they want. Pretty hard to prove actual manipulation, but it goes on.

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