The Securities and Exchange Commission is investigating several cases in which people may have tried to manipulate the Nasdaq Stock Market by entering false quotes for a few seconds before canceling them, an SEC official said.
What are the threads thoughts on this practice? I hate to sound pro-manipulation, but I don't see anything wrong with placing a legitamate order with the hope of having the order move the stock in your direction.
For example, suppose I want to sell 5000 shares of WXYZ stock. You realize that you cannot sell that many shares at current levels, therefore you take a chance, a risk. You decide to place your 5000 share order at the offer on ARCA, for example, with a maximum display size of 600 shares. With this relatively harmless order sitting on the ask, you place an INCA buy order at the inside bid for 10,000 shares, hoping to give the stock a little momentum to fill your sell order. Seconds later, a flurry of buy orders fill your 5000 share ARCA order and you cancel you INCA bid.
My question is... What's wrong with this??? So long as the INCA order is a legitimate order and can be executed against, I've got no problem with this sort of activity and I think 'manipulation' is a bad word for it. I would simply call this 'trading.'
Note that I've never done this sort of activity, but I don't have a problem with those that do, and I don't see why it should be outlawed. Comments?
-Eric |
