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Technology Stocks : Amazon.com, Inc. (AMZN)

AMZN 233.95

+0.3%

Dec 1 3:59 PM EST

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To: Joseph Coleman who wrote (2110)	3/10/1998 5:29:00 PM
From: Don Westermeyer	Read Replies (1) of 164684

Joseph, Blame the regulators for driving liquidity out of the small caps. I'm not sure what you are talking about, but I don't believe there are any regulations concerning spreads. MMs and spreads are better monitored these days. I'm not sure if it still occurs, but spreads used to often narrow at the close to give the illusion of better execution. By narrowing the spreads, market makers are not going to carry inventory. You now have the "just in time" market positioning that will lead to serious liquidity problems during a market downturn. In an effort to save a couple of pennies, investors will lose dollars. This is nonsense. Nobody can force a MM into a specific spread. That is determined by the number of MMs trading the stock and the supply/demand in the market. Also I doubt that MMs have never held enough stock to greatly effect the liquidity of small cap stocks. In fact, the more stock they have, the faster that bid price drops the bad news arrives. I certainly agree that MMs are still needed, but should be monitored closely. FWIW - I don't attribute the recent rise in AMZN to MM games.

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