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Technology Stocks : PRI Automation up 30%
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To: Carl R. who wrote (64)8/3/1996 4:08:00 PM
From: Scott Maxwell   of 193
 
There's nothing unusual about a big spread in a thinly-traded stock, Carl. On days when lots of shares are being traded the spread often narrows -- but only while big blocks are moving.

Making a market is a competitive enterprise. If it is wildly profitable, other companies will enter and reduce the spread -- any NASD market maker can make market in any stock they want after suitable notifications. There's certainly plenty of funny business in NASDAQ, as the article points out, but the mere fact of a big spread is not evidence of a conspiracy.

The real question, of course, is why market makers are needed at all in this electronic age. There's no reason why buyers and sellers can't be matched by an automaton, with the order processing at a flat $10 or so -- except the government has regulated this business, set up NASD, and prevented all of us from accessing the "inner spread" prices the market makers can get.
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