Barb,
I just finished reading this article which is from Forbes and was wondering if you could comment on the potentials of IT after reading it. I ask this as the article goes into great detail about how the percentage of activity of trading is increasing on the Nasdaq vs the NYSE.
In 1982 the NYSE traded 63% of the shares changing hand while Nasdaq traded 32%. In 1992 Nasdaq's share had jumped to 47% while the Big Board's had dwindled to 50%. The Big Board's former 2-for-1 lead has turned into a dead heat.
Reading further, the article goes on to say, an investor has little chance of getting a deal between the spread on the Nasdaq unlike the big board. And percentage wise an investor is paying higher premiums on the Nasdaq over the NYSE. So, if a person is not really able to buy between the spreads......
Unless you are a huge investor or otherwise carry clout, you can't get your order executed at a price between bid and asked. In most cases, you pay the asked price or you don't get the stock.
what good does execution time do an investor? For Nasdaq orders, it seems you're no better off than setting a limit order and waiting if you don't want to pay the current ask. Unless, you think you have a better chance of your order getting filled because your limit order got their faster than the other limit orders. But for execution time being imperative, I would think somebody wouldn't be waiting for the best price. In light of how the Nasdaq really operates, and it's growing faster than the NYSE in number of companies getting listed, I don't see the incredible advantage to IT any more. Do you?
Why hasn't competition narrowed the Nasdaq spreads? Cut through the rhetoric and this is what you discover: Nasdaq is more costly for investors because the dealers work together to keep it that way. As one cynical o-t-c trader points out: "In the over-the-counter market, the competition is between the dealers and the customer."
the article's rather lengthy but worth reading.
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