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Non-Tech : Meet Gene, a NASDAQ Market Maker
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To: LPS5 who wrote (1245)11/30/2000 11:48:29 PM
From: Dan Duchardt  Read Replies (1) of 1426
 
LPS5,

Calling it a "tax" merely endeavors to use a word with a broadly negative connotation to distract from the fact that a $20 bid or offer posted on an ECN or ATS, when accessed via SelectNet, is not in fact "$20."

A $20 bid is a $20 bid is a $20 bid, but hitting a $20 bid will never buy any of us a share of stock for $20. Whatever term you choose to call it, the effect of the scheme proposed by Nasdaq is to give execution priority to dealers by demanding that the FEE charged to access an alternative and often superior execution path be misrepresented as part of the share PRICE. Fees charged by ECNS are no more related to share price than are brokerage fees charged to investors to gain access to the market. In fact, although a brokerage firm is obliged to pay the fee for accessing an ECN via selectnet, there is no obligation I know of to pass that fee along to the investor/trader.

Fees are fees, and stock prices are stock prices, and mixing the two is, IMHO, entirely inappropriate. Investors can choose the broker they want to use where they feel they get the best value for what they pay to access the market, and if they choose a broker who passes on ECN FEES they accept that as part of their cost of doing business. It has nothing to do with the price they pay for shares of stock.

Dan
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