"MM's are not filling orders very quickly or at all..."
Obviously not an isolated event, nor, limited in scope-
Sprintcar posted this on another thread:
SEC CHIEF WARNS OF
PRICE PROBLEMS
1 EXCHANGE FAILED TO
PROPERLY SHOW SOME LIMIT
ORDERS
By Bill Barnhart
Tribune Markets Columnist
March 17, 2000
On the heaviest day ever in New York
Stock Exchange trading, the head of
the Securities and Exchange
Commission warned Thursday that
investors are not always being shown
the best prices when they buy and
sell.
Arthur Levitt said that one stock
exchange, which he declined to name,
had failed to properly display one in six
of the so-called limit orders coming to
the exchange from investors. He said
the practice is under investigation.
Limit orders, which have become
increasingly popular among individual
investors, are orders to buy or sell
securities at a specific price, as
opposed to an order to buy or sell at
the prevailing market price.
"In far too many cases, limit orders
are being mishandled by market
intermediaries," Levitt said. "I am
deeply troubled by this apparent
disregard for customer orders and
systematic competition."
SEC sources indicated that the stock
exchange with lax enforcement of limit
order display rules was one of the four
regional exchanges.
Paul O'Kelly, executive vice president
at the Chicago Stock Exchange, said
his exchange was not the target of the
SEC probe. "I can tell you with
certainty it isn't us," he said. The other
regional exchanges are in Boston,
Philadelphia and San Francisco.
Levitt said the SEC would issue a
report in the next 45 days probing
market compliance with limit order
display rules in equity and options
markets.
In a speech at the Northwestern
University School of Law in Chicago,
Levitt called on the nation's stock
exchanges, securities dealers and
electronic communication networks to
open their books of limit orders fully to
the public. All orders to buy and sell,
not just orders at the prevailing best
price, should be revealed, he said.
Levitt urged all dealers and exchanges
receiving limit orders to fashion a
system in which orders would be
quickly displayed publicly.
In the worst case, a dealer or
exchange specialist hides a limit order
that improves on the prevailing price in
an attempt to trade ahead of the
order. Such practices were the subject
of sweeping SEC regulatory action in
1997.
"Given the plain importance of limit
orders to investor confidence and
market efficiency, you would expect
that ensuring their visibility would be an
unyielding imperative of our
marketplace," Levitt said. "But
information gathered this past year by
SEC examiners indicates just the
opposite."
Levitt said the SEC's pending
requirement that stock exchange quote
prices in decimals rather than fractions
based on one-eighth of a dollar
magnify the need for fully open limit
order books. The change in price
quotations is scheduled to begin July
3.
On a related theme, Levitt called on
the securities industry to create better
links across proliferating stock
exchanges, dealer networks and
electronic communication networks.
He said the current system linking
markets in exchange-listed stocks and
the SelectNet network of Nasdaq
stocks were not performing
adequately.
"With today's unprecedented volumes
and new demands, it's the obligation
of every market institution to commit
their resources first to
technology--before marketing
campaigns or dealer benefits," he
said. |
