Cash:
I was referring to the fact that most "SOES" shops charge
by the "ticket." Generally, and depending upon your volume,
it runs $15 to $25 per ticket on NASDAQ stocks. So,
if you do a 10 share or a 2,000 share trade, the
cost is still the same. Most SOES trading is
done in 1,000 share lots because that is what the
mm's must honor on most stocks, and that is the limit
at which one can SOES them and of course it makes the
most economic sense for the trader.
If they drop the mm's exposure to 300 shares without
a corresponding drop in commission, the SOES shops
will dry up. Remember that there was hardly any SOES
trading until they boosted the limit from 500 to 1,000
in the Spring of 1995. Harvey Hautkin at All-Tech was
responsible for bring this about.
Historically, in the late 1980's and early 1990's, SOES
trading was at a 1,000 shares, no 5 minute rule, and
you could short on a downtick. The mm's stepped in and
changed all that. Houtkin did manage to get back the
1,000 share bit.
Although SOES activity today is rarely profitable from the trader standpoint, it is extremely profitable for the SOES shop. They love to
say they allow the little guy to compete with the big
boys. You know, the housewife, truck driver, etc. can
now stick it to the Goldman partner who makes $5MM/year.
NOT!
Collectively, SOES is a small pain in the rear to the
mm's and that is why they are constantly trying to eliminate
it and NextNasdaq is another attempt.
Paul |
