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Strategies & Market Trends : The Final Frontier - Online Remote Trading
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To: Dan Clark who wrote (8104)3/31/2000 2:43:00 PM
From: Robert Graham  Read Replies (2) of 12617
 
There is apparently a communications problem here on my part. I thought you were talking about how unfair it is that your service provider is charging $50, when it is the exchanges charging this amount. This is beyond your exchange fees charged on transacting a trade. This information is available from DBC and Quote.com. But I see you understand this, and looking at your user profile I can understand why. The reason I thought this information was relevant is that it is more likely your service provider to come down on their rates before an exchange like NASDAQ will consider doing the same. And as long as the majority of the business is managed by MMs and the exchange, and consequently this information on MM activity remains important to traders, there is no incentive for NASDAQ to eliminate these monthly fees. Why should they? They are a business in business to make money.

Second, Level II shows allot more of the picture than an Island book ever will. This is because much of the activity that takes place in the market happens outside of Island. Correct me if I am wrong here, but MMs still handle most of the transactions on the NASDAQ and also work institutionsal orders that represent by far most of the money in the stock market. Correct? So MMs have allot of money backing up their operations in the market, directly through their business and indirectly in the working of very large orders. This together with most of the transactions still going through them afford them allot of impact on the market in the short term intraday view. Correct? Island does not now handle most of the transactions that occur on NASDAQ. Correct?

So why exclude yourself from MM activity that does have allot of influence on the intraday price action of stocks? Does Island provide this? You did say that Island provides what NASDAQ Level II provides, but for free in this comment I found in one of your posts.

I hope this includes the Nasdaq LevelII. $50/month for LevelII is absurd when Island provides the same thing for FREE!

Perhaps there is something I am not understanding. Island now provides MM activity in the NASDAQ market together with their Island book? Or are you thinking of NASDAQ just like another ECN, which it is obviously not. It is the exchange itself, and ECNs are satellite operations that are permitted to do business as part of the market operations NASDAQ facilitates. Or do you think an ECN can separate itself from NASDAQ and still be in business the next day? So unfortunately NASDAQ is in the position to charge this $50 per month for as long as they want to.

As far as liquidity is concerned, look at the Mexican Stock Exchange as an example. They do not use specialists or market makers. Give it a look. Track the stocks. You may even attempt orders there. I suspect you will see a different world there which will give you more of an idea of what you would be up against as a day trader. But then I think the problem with NASDAQ is how the MMs are allowed to operate and not the liquidity service they do provide.

Looking forward to your thoughts. :-)

Bob Graham

PS: For a day trader, despite the apparent unjustifiably high price for NASDAQ Level II quotes, I would think $50 would be considered simply a cost of doing business. Would $50 a month make a difference to your bottom line?
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