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

To: ~digs who wrote (595)	8/17/2000 12:20:37 AM
From: SteveDavis	Read Replies (1) \| Respond to of 1426

Gene. I would like to have your take on the move to decimals. Is the theory that profits will suffer because of the small spread (1 cent?) possible? Will spreads increase in less liquid stocks to compensate? What is the expectation of the MM community? Thanks Steve Davis

To: ~digs who wrote (595)	8/17/2000 10:33:27 PM
From: gene_the_mm	Respond to of 1426

PROTEGE...RE: 'HITTING THE STOPS' While I am very aware that such activities occur frequently on the NYSE, the NASDAQ is designed quite differently. Many brokers I know of DO NOT take computerized stop-loss orders and therefore are not subject to this. However, of the brokers that DO have stop-loss orders, you have to consider that these stocks are not made up of ONE specialist. There are many MM's and therefore trying to go for stops has that much more of an 'unknown' element (who knows if somewhere along the way to those stops there isn't a monster order/MM waiting to take the opposite side). Also, the accumulation of stop-loss orders would be spread out among many different MM's (order flow from different online brokers and brokerage houses goes to different MM's) and I really don't believe there are that many stop-loss orders in ANY stock to make this type of activity beneficial for an MM. FINALLY, I am not sure but such activity might be considered manipulative and CLEARLY is not in the customers best interests. Any MM who would engage in an ongoing PATTERN of such activity stands a chance of being looked into by the NASD (especially if complaints were filed). All that being said, I believe the autonomous stops you speak of are clearly the way to go. Whether you believe stops are hit or not, the autonomous stop kept on your brokerages server side is brilliant. It hides the order from the possibility of any MM transgressions, and it also protects you in the event that your OWN computer crashes by having the order on the BROKERAGE side (unless of course the brokerage computer goes down too!). Dave... Unfortunately the order flow at my little firm can be very 'thin'. I have never had any stop-loss orders, nor would I even consider doing something that might be considered borderline such as that. I hope that helps. All the best, -- Gene