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Strategies & Market Trends : DAYTRADING Fundamentals -- Ignore unavailable to you. Want to Upgrade?

To: aldrums who wrote (7079)	3/1/2000 10:15:00 PM
From: Dan Clark	Respond to of 18137

In general, I'm for it, but I'd need to see the details. The biggest problem that we face (IMO) is liquidity - finding someone to buy/sell from, at the price you want, at the time you want to. If it was implemented similar to Island where the order executes immediately, I think it would be very good. Also, I'd like to see the data feed cost be reasonable. I can't understand why I have to pay $50/month to "Nasty" for LevelII when I get Island Book for free. Bottom line is that the central order book should treat all traders equally, unlike the current situation on Nasdaq where some traders are more equal than others. Regards, Dan.

To: aldrums who wrote (7079)	3/1/2000 10:27:00 PM
From: LPS5	Read Replies (2) \| Respond to of 18137

The proposed solutions to the fragmentation "problem" lie between an ITS styled, technologically updated intermarket/ECN/ATS link (i.e., a system that sends an order to the lowest bid/highest offer, while not showing the quotes in order book form) vs. a central limit order books that looks and 'acts' like an ECN. I personally am in favor of the following: A moratorium on new ECN and ATS creation for a year or two, letting consolidation take its course (mergers, acquisitions, and insolvencies of the existing exchanges, ECN's, and ATS'), and culminating in a re-examination of the market landscape at the end of that period. If, at that time, the market was deemed (still) fragmented to an extent that customers were overwhelmingly not getting access to the best prices available, one of the proposed systems would be put in place. Whether the upgraded Intermarket Trading System or the Central Limit Order Book, I would want it run by a private corporation formed under government charter, specially for that function, reporting directly to the SEC - not unlike the manner in which SIPC or the NSCC do. I would also favor, during the "new trading system moratorium," both the implementation of decimalization and the mandated combination of the NYSE and NASD Regulatory bodies, for the purposes of consistency and efficiency. The combined regulatory body formed by merging the two SRO's and their membership would have regulatory power over the broker-dealers using whichever new system, if any, that winds up being adopted. Meanwhile - as previously mentioned - the CLOB or ITS would be SEC-monitored and reporting. LPS5

To: aldrums who wrote (7079)	3/2/2000 7:03:00 PM
From: Eric P	Read Replies (2) \| Respond to of 18137

I'll give my thoughts on a Central Limit Order Book... The ideal solution, IMO, would meet the following requirements: 1) Must allow for instantaneous execution speeds to the counter order(s) with the best price/time priority. => First order in at the inside bid gets filled before any other order behind it gets filled. In this respect, it would be much like an ECN. 2) Must allow market makers to 'hide' the true size of their order. Also known as 'reserve size', I believe, this would allow market makers to place orders for 15,000 shares and have them displayed at only 1000 or 100 shares at a time. => However, if a matching order comes into the market for 5,000 shares, this entire order should be filled instantly, with the market maker quote still showing all or part of the remaining size of the order. In this respect, it would be must like certain ECN's such as INCA, BRUT and BTRD among others offering this feature. 3) Must treat all market participants equally. The current system allows market makers to maintain bogus quotes for up to 17 seconds without filling any additional size. This is an outdated feature with is not consistent with the capabilities of our electronic market. The Central Limit Order Book should know the true size of each and every order in the stock, and instantly fill orders to the maximum size possible against an incoming order. When an order on the book is entirely filled or exhausted, *it should go away. Instantly.* 4) One fine line of distinction for market makers would be a feature allowing them to electronically back their quotes away from the inside market by X points (1, 2, 10, who cares?), once their posted order is filled. This will allow them to maintain their supposed market maker function. In reality, market makers providing liquidity for the marketplace is currently a joke. I think serious consideration should be given to entirely eliminating the market maker system. What we actually have is a marketplace full of traders... Some trade for brokerage firms, market maker firms, and others trade from home, for hedge funds, etc. But together, these traders collectively provide the liquidity for the marketplace. 5) With the Central Limit Order Book, all ECNs and ECN fees would be eliminated. I guess this post is already long enough. I'll leave it at that. Another interesting point for discussion would be what are the hazards and concerns of a Central Limit Order Book, such as described above? Would liquidity be better or worse? Would the average investor get better executions on average, or worse? Would the market be more fair for independent traders such as us, or worse? Good luck, -Eric

To: aldrums who wrote (7079)	3/2/2000 9:47:00 PM
From: robert b furman	Respond to of 18137

Central Order Book = Cronies Over Buddies. If the markets are to be the most efficient - then whoever - where ever - the highest bidder is ,should be given the front chair.Schumer (representative from the great state of New York) worrying about foreign dominance - read that anywhere in New Jersey or farther away is the "GOOD OLE BOY" personified. The reality is "Get Electronic" - "Get There Fast" and if you are good ,you can hold onto your leadership status.It is a "no brainer" that this E- World global marketplace will displace the "constituents of the New York Stock Exchange". This will evolve elsewhere 'if NYSE is slow to acknowledge it - or stay in the U.S.A. if they stop the "self policed" favors they have allowed themselves since inception.JMHO Bob