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Strategies & Market Trends : DAYTRADING Fundamentals
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To: Threei who wrote (8233)5/5/2000 6:27:00 AM
From: Eric P  Read Replies (2) of 18137
 
Vadym:

Is there anything that would keep MM from immediate posting new 100 shares quote at the same price, essentually doing the same thing as they do now? I understand that it should be a little bit awkward but still? Besides, it's probably not too hard to automatize. I haven't found so far any obstacle to this.

I'm not sure where I read this, but I believe the new rules prohibit market makers from utilizing automated programs to repost the same 100 share order at the inside market. They will be able to repost their orders manually at the same price, though. But this shouldn't become a problem since I market makers won't find it much fun to watch their 100 shares be taken out then quickly reposting another 100 shares manually... for hours at a time. Essentially, market makers sitting at the bid or offer filling only 100 shares at a time should be an issue that goes away. I wish I could remember where I read this. Can anyone confirm this as true?

I do agree with you with the finger speed issue. When limited shares available, the first trader that get his order sent will get them, as always. The key is that (assuming ECNs participate) no advantage will be given to traders who are using specialized order routing software and the choice of which type of order to sent will be a non-issue => This will simplify the trading decisions that need to be quickly made. In other words as you said, the middle step of the three step trading process will be removed.

At last, a Nasdaq change that apparently will help traders. They must really be feeling the heat from the ECNs to be willing to make a constructive change to help their customers... us.

-Eric
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