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Non-Tech : Meet Gene, a NASDAQ Market Maker -- Ignore unavailable to you. Want to Upgrade?

To: Pierre Borczuk who wrote (576)	8/16/2000 12:33:43 PM
From: Wayners	Read Replies (1) \| Respond to of 1426

Message #576 from Pierre Borczuk at Aug 16, 2000 9:23 AM I think there is still some sort of conspiracy against traders... Since I can't differentiate easily between a MM bid or ask or a MM client's bid or ask I have to defer to Nasdaq's SRO to ensure there is no funny business going on there. I'm pretty certain that the vast majority of orders you see represent client dollars but I have no way to prove this. With regards to conspiracy, only one area stands out in mind. From my own trading experience there could be a word of mouth program going on that goes, "If you're a MM working client orders you have a duty to ensure that all ISLD bids or asks or other retail ECNs shall be the last ones to be picked off any particular level". I have no proof of this of course but its crossed my mind many times having seen it happen again and again and again. It could be a function of payments for order flow or it could be collusion. We may never know.

To: Pierre Borczuk who wrote (576)	8/16/2000 9:18:24 PM
From: gene_the_mm	Respond to of 1426

PIERRE... While MM's provide liquidity to the markets, they do not make markets only to 'have their heads handed to them'. The tier size requirements were dropped at the same time ECN's came into power and would 'pop in and out' of any stock, without risk and without tier size requirement. If you admit that 2/3 of the time the MM's perform BETTER than their posted size, why are you complaining? Why should MM's be forced to sell size (Yes, 1000 shares in some of these 2 million share float deals is a large order) in volatile stocks (some swing 10 to 20 points in a day - 1000 share pick off could easily cost $3000 to $5000 in two minutes - if that was the case you would see NO MM's making markets in these stocks) so that the momentum traders can pick them off when the ECN's have no liability? I guess it boils down to that you cannot have it both ways. Don't get me wrong -- MM's are their to help keep an orderly market and add liquidity. However, at the same time they are NOT there to lose money. The risk involved in making some of those stocks 500 to 1000 share tier size would all but eliminate most of the MM's from making markets in them because of the risk/reward ratio. It would actually make those stocks HARDER to trade if that was the case. IMHO, the spreads would actually widen because of the tremendous risks. Then again, I could be completely wrong... The bottom line is that there is no conspiracy against LEVEL II traders by MM's. What you see is MM's trying to limit their risk, nothing more. I hope that this made sense. All the best, -- Gene