No... the MM is not bid-rigging. Let's say that he doesn't want to sell the shares short in order to fill the order and he has zero inventory. That means that he must accumulate, in this case, 100K shares so that he can sell it to the buyer. The stock is at 140 and there is no significant size until 144.
So the MM is an active buyer at the bid until he accumulates the 100K shares that he needs to sell to the buyer. Traders can see on L2 that the MM is continually refreshing his bid, so they start to buy driving the price up. The MM raises his bid, looking for more shares to fill the order. Since no significant size exists until the 144 level, this cycle repeats itself until the the MM has accumulated the necessary shares to fill the order.
BTW, when I am daytrading and looking for the end of an uptrend, I look for the big blocks to hit on the ask. In this case, when the 100K block hits on the ask, the MM is no longer a buyer, because he has filled the order, and you can see that he is no longer bidding. This indication is a bit tricky since there are so many parties involved, but it is one indication of trend reversal.
Mike |
