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Non-Tech : Meet Gene, a NASDAQ Market Maker
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To: Wayners who wrote (432)8/5/2000 12:06:14 AM
From: ahhaha  Read Replies (3) of 1426
 
Let's assume you are referring to illiquid BB stocks since for 10,000 NAZ issues this claim is blatantly false.

The MM isn't required to bail the greedy public out of their bad judgement, not even within 1/4 point. Depends on other factors. The stock may admit 1 point nominal spreads. Let's say the MM didn't even provide the 1/4 discount.

That would be more in line with free market principles and it provides the gambling public fast information that they can't operate glibly in illiquid stocks. When the MM is bailing out the day traders a false appearance is generated that liquidity is higher than actually exists based on the public order flow. In light of this consideration it is eminently fair and reasonable that MMs should have no requirement to make an accommodative market. You should be allowed to lose more.

You say that the MM suddenly provides "tons of liquidity". This is actually a statement that the MM is bidding or offering in front of the public's action and that is expressly prohibited. Why is that? Because you claim the MM is buying more at a level lower than where they had been buying, but how do you know whether the MM is working a public order specifying that level or buying for their own account because the nearest bid is too far away to make a continuous market?

99% of the action is agency even in obscure BB stocks. The MM could care less about profit opportunities in these cases. The profit opportunities come when the public wants to transact at some level way away from the last trade based on their fear or greed. The MM is required by rule to get on the other side of the public action since none of the public will do that at any rational level. If there was no MM, you clowns would be dealing with square well price action, and that would also be free market and eminently fair.

You're damn straight they do this. They have to obey the rules.
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