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Strategies & Market Trends : DAYTRADING Fundamentals
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To: Eric P who wrote (8000)5/3/2000 6:06:00 AM
From: Redmond Quain  Read Replies (1) of 18137
 
In Eric P.s excellent post re SuperSOES (Reply#8000)we find the following:

6) Another interesting change is that, under most cicumumstances, market maker orders on the new system will immediately be removed from the inside bid/ask once their displayed and reserve size has been exhausted. This is a major improvement, as market makers will no longer be capable of halting a move in the market by merely filling one 100 share order every 17 seconds and refusing to back away from the inside market. For example, assume that the inside bid is 82 1/2, and there are three market makers displaying sizes of 300, 500 and 400 shares respectively. If you place a market SOES order for 1200 shares, you will 'take out' all three of the market makers and their quotes will immediately be eliminated from the Level II display and
the inside bid will drop to the next highest level. The market maker will then have up to 5 minutes to post a new quote for the stock to replace the one that was 'taken out'. This is exactly what many of us have been suggesting as a 'fair' solution for a long time. Hopefully, it will work in practice as well as it seems like it should.>>

I don't understand the following extract: <<The market maker will then have up to 5 minutes to post a new quote for the stock to replace the one that was 'taken out'.>> Is the MM given some sort of priority? What significance is there to this for the person wishing to place an order on the system?

Could someone explain?
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