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

To: Eric P who wrote (8239)	5/5/2000 7:58:00 AM
From: TraderAlan	Read Replies (1) \| Respond to of 18137

Eric, I wonder about 2 things: how this will impact the use of INCA which MMs hide behind to do their work. Also will this dry up liquidity more or not. The current liquidity decline started when MMs stopped making markets and started becoming traders and order takers (ie they stopped assuming risk). I don't claim to understand how this will work. Fortunately I won't be trading in June as I finish up the book before the deadline. So I appreciate all you folks using your $$$ instead of mine to figure it out <g>. Alan

To: Eric P who wrote (8239)	5/5/2000 5:59:00 PM
From: Dan Duchardt	Respond to of 18137

Eric, I'm not sure where I read this, but I believe the new rules prohibit market makers from utilizing automated programs to repost the same 100 share order at the inside market. They will be able to repost their orders manually at the same price, though. But this shouldn't become a problem since I market makers won't find it much fun to watch their 100 shares be taken out then quickly reposting another 100 shares manually... for hours at a time. Essentially, market makers sitting at the bid or offer filling only 100 shares at a time should be an issue that goes away. I wish I could remember where I read this. Can anyone confirm this as true? I read it too, in your nice summary post on the issue Message 13498913 I'm sure you had a source for all of that, perhaps the video you mentioned. The biggest effect I see of going from the 100 share, 17 second delayed refresh world to a manual refresh (if the MM chooses to do that) is the window of opportunity it creates for the inside market to adjust to selling and buying pressure. Currently, the no locking/crossing rule prevents someone from bypassing one of these dormant quotes, and that's what gives them their power. If a small quote is taken down every time it is hit, then unless there are other quotes at that price the market will have an opportunity to move. Plus, if when a quote is restored it is immediately available for execution, MMs won't put them up as a blockade as they can now. If there are other "real" quotes holding the inside market, and if every quote seen is a real opportunity for an execution, I don't care how often they get refreshed, manually or otherwise. Others have noted that this change may increase volatility, and I expect that will be a natural result of eliminating the blocking mechanism, but at least I wont be wasting my time trying to hit prices with nothing behind them. Dan