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

To: Robert Graham who wrote (8994)	6/17/2000 12:15:00 PM
From: OZ	Respond to of 18137

From what follows in your post, you imply that the MM will act as principal on an order from a small retail account, which is the norm. How would this be in the MMs (or more particularly) the retail accounts best interest? Wow, i have de-cloaked you again!!!! I think it is obviously occurring just based on the fact that discount broker charge "small retail" account customers much less commissions for Market Orders over Limit Orders. This lower fee is offset by the payment for order flow that the MM is paying him for the order. The MM is not paying out of the goodness of his heart. It benefits the public interest in that the customers agenda of "get me the stock NOW" is being serviced. If price was the consideration, then it should be a limit order. I really do not care to philosophically discuss the virtues of this. Just want people to know what goes on. It is not only happening on "large" orders. It is happening allot on small orders, though at a much smaller markup than I used as an example of. Another thing to remember is that as the spreads get tighter, the markets will just get larger. OZ

To: Robert Graham who wrote (8994)	6/17/2000 4:45:00 PM
From: booters	Respond to of 18137

<I do agree those "spikes" that can be periodically seen on the tape is the result of the markup or markdown procedure on large orders after the order has been worked and now the MM needs to balance their book work by printing the transfer of funds between the MMs account and the retail account they were servicing> This is over my head but: Could one conclude that the spike meant the trade was now over and perhaps the direction of the spike have meaning and that if the trade was now over the pressure would be off? boots

To: Robert Graham who wrote (8994)	6/17/2000 5:33:00 PM
From: booters	Respond to of 18137

Robert, My previous post is not clear, sorry, you have answered those questions. What I was interested in was your statement that the spike was the MM "balancing the books". This statement in conjunction with the statement you were responding to "MM acting as a principal can charge a 5% markup on the current offer or buy for a 5% markdown on the current bid when executing a market order" seems to imply the spike is the MM taking his profit or fee. If this is correct, then wouldn't the spike be in the same direction the customers order was. Example, if the order was a buy then the spike would be above the market. I would think the order printed outside the market would have to be between the MM and the customer so the MM has already over bought the order to the size of his fee and is now selling back those shares to the customer at the appropriate profit. Is this what the two of you mean or am I way off base. Thanks, boots