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Strategies & Market Trends : DAYTRADING Fundamentals

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To: LPS5 who wrote (7238)	3/11/2000 11:46:00 AM
From: aldrums	Read Replies (3) of 18137

Market Makers sitting on the ASK I have a question regarding Market Makers sitting on the Ask: I observed on two different days in two different NASDAQ stocks a Market Maker "holding down the stock" on Level II by staying on the inside Ask and not refreshing the quote. Here is the scenario: 1. On both occasions the MM's were at the inside Ask for over 40 minutes while many times the market was crossed and locked. 2. A large volume of trades were being executed, a large # of MM's and ECN's were on the Bid and Ask. 3. Many times the quote the MM was displaying was a unique price on level 2 not displayed by any other MM on the Bid or Ask. 4. The amount of shares displayed was 100. Here is my question: For over ten minutes at a time I would not see any prints for the inside ask (at the unique share price.) Since the crossed market provided many opportunities for arbitrage, I expected to see many trades going off at the inside Ask being the MM in question would be SOES'ed at least every 17 seconds for the 100 shares he displayed. How could a MM display a 100 shares at the inside Ask for such a long period and not make any sales?

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