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Strategies & Market Trends : From the Trading Desk

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To: steve goldman who wrote (3335)	6/30/1998 9:07:00 PM
From: Colin Cody	Read Replies (1) of 4969

Steve, Maybe you have a feel for these questions: . I recently have learned that I can place a limit buy order at the inside quoted BID and the Market Maker will go into the box with my price and my size. OR if I am willing to pay a stinth over the best bid, I can have the MM raise the inside quote with my order. . The Questions: WHEN did this new way to play the game start to happen? and WHY? . How do the MMs make a buck on this? I have noticed two ways it flows. One is a see a print of TWO trades within a couple seconds at my price which I presume is a retail sell at the Bid, and a flip to me through the MM's "books" to fill my "buy". No profit there!!??? . The other way is the tape prints just one trade, my order, and that's it. I presume this is a retail sell at the Bid, that the MM chose to direct into my account without passing it through "his books". . Are these assumptions correct? If so WHY would it be handled differently? (one print vrs TWO prints). . And the most important thing HOW DO THE MARKET MAKERS make a buck doing this service "for me"? . Colin

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