Dean, in reply, I grabbed a magazine to quote from, rather than just express my opinions in a "he said, you said" discussion.
Here's one by Robert J Flaherty in the October '98 issue of Equities:
"...today, new Nasdaq trading rules have taken the profits out of doing proprietary risk trading for unknown small-caps. Worse, institutions and regulators all are obsessed with serving the current large-cap stock successes." "But in the less liquid middle-cap and small-cap markets where promotion by dealers who buy the stock for inventory and sell it when its story is better known at a higher price, the incentive to continue is dicey."
"Spreads have narrowed. Daily volatility increases risks [to the MMs]."
"Hundreds of companies have floundered because their stocks have not attracted positive attention and they could not attract expansion or sometimes even survival capital."
He lists as an example: SPGNU-OTC-BB selling under $.30 needs to raise money to survive and to expand, but the equity markets for small-caps are not as kind as in prior years.
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In another story, same issue:
"The new SEC mandated trading rules which require showing more inside quotes and limit orders have reduced profits and spreads and increased the cost and personnel to handle orders, forcing many firms to cut back on the number of stocks in which they make markets."
"Troster Singer [TSCO], in a zero tolerance environment, has been fined for reporting delayed quotes and its head trader was suspended."
"Higher Nasdaq maintenance standards have expelled hundreds of weak, low-priced companies and domestic listings have fallen to 4,862."
"The big trend [in 1998] is the top wholesalers have expanded their inventory of stocks. HRZG and NITE want to trade almost everything."
"when there is imbalance [in the markets] the [MMs] save the day. Let's not make them an endangered species."
BTW they also listed the top ten wholesalers for 1998 as elected by their peers: HRZG MASH NITE TSCO SHWD USCT HILL MADF WIEN CANT
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