This is unbelievable. I hardly know where to start.
"The upside is that investors are getting that meeting possibility," said Richard G. Ketchum, president of the NASD. "The downside is that they are not getting any execution guarantee."
Sure, when Merrill Lynch calls me in the morning with their latest "tip" I am guaranteed the ability to buy. But, from my experience, it's ALWAYS at the highest possible price of the day.
"A growing number of day traders, who buy and sell furiously all day long, hoping to capture tiny per-share profits on large trades, execute their orders on the networks. Their lemming-like behavior in stocks that are already moving has made 15-point single-day swings common."
So if they're so concerned about wild price swings and the difficulty of getting filled, why are MMs only obligated to fill 100 shares instead of 1000 or more? Daytraders didn't make up this rule, but I bet we'd support a change back to 1000 share minimum obligations by MMs.
"If there is no seller willing to take the other side of the trade at that price, his order remains unfilled."
So why don't we set up a taxpayer funded MM that buys when no one else will? This is a joke. Remember, trading and investing is risky. That's why some people make money and others lose it. Who ever mentioned guarantees about anything?
"...stocks may be costly to trade because the size of the typical trade is small: 1,000 shares or less. When smaller orders dominate trading, it is more likely that a single order will move the price of the stock, increasing investors' costs."
Hence my point above. Also, I seem to recall on one of these threads within the last month an employee of a large brokerage house posted what happened when they needed to sell a large block of stock (hundreds of thousands of shares). He watched as the order was filled. Average size they were selling: 200 shares. How many daytraders do you think trade 200 share lots? From my reading of these threads, not many. Again, daytraders are being blamed for something that MMs are controlling.
The article seems obsessed with dealing with front running market orders. How can daytraders possibly be held accountable for this! And just what is some guy with 15 years experience doing entering market orders in a thinly traded stock. I've had no problems hitting the bid or ask in any stock ever. If he saw a bid at a certain price, what's the point of putting in a market order. Sounds a bit fishy to me. I hope Ms. Morgenson is checking her sources because much of her article sounds just absurd.
I don't know who I'm addressing right now, but I'm just furious. I wonder what the future holds for fair trading if casual investors are buying the crap that they're reading in articles like this one.
Regards to whomever,
Paul Kaz |
