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

To: dannobee who wrote (645)	8/19/2000 10:45:01 AM
From: LPS5	Respond to of 1426

BARRA and ITG's POSIT are two separate products which can be used, though certainly don't require usage, together. BARRA's applications focus upon trade modeling and risk management, while POSIT is a crossing engine with lots of institutional functionality. It is, indeed, be much smarter in most cases - particularly in a thinly traded issue - to execute with a system (or strategy) that won't leave as much as a footprint as something that sweeps offers or pounds bids right out of the market. If you're working a large distribution on an agency basis, getting in or out within client-specified price parameters is crucial, and the time it takes to do so is secondary (until you notice your target price creeping up on you!); if you're accumulating on a principal basis, well...you're still going to be careful, but can replace the crucial price variable with the time variable, if you deem necessary. You're not missing a thing, danno :) In my opinion, though, what SuperSOES does (automatic executions) and who will be able to use it (customers and dealers) is far more important than the size eligibility. LPS5

To: dannobee who wrote (645)	8/22/2000 9:17:28 PM
From: gene_the_mm	Respond to of 1426

DANNO... I honestly don't know, though it might be likely. However, I will say this. If the proposal passes as planned you will see HUGE more amounts of volatility, and in turn less MM's stepping in to many of these stocks and risking capital (the risk/reward will shrink with the increased volatility). While this will create more opportunities for the astute traders, MORE traders will actually lose money due to the whipsaws, MM's included. That being said, many of these institutions who are supposed to be the beneficiaries of all the changes (NASDAQ has outwardly stated their priority of keeping the big institutions and funds to continue investing in NASDAQ stocks and their market) will actually suffer. How you ask? Well, with less MM's the volatility will increase drastically. Now, to make up for increased volatility for the MM to risk large amounts of capital they will no longer be automatically printing the big funds and institutions (even the bigger firms will LOWER their automatic print ratio for these large funds) as much on the bid or offer (or within an 1/8th). Also, when that MM goes to buy the stock he will simply be putting his order into SOES and seeing where the stock goes. When it reaches a saturation point he makes a decision on whether to print the balance of the order at the level or keep 'working'. The problem, in my opinion, is that the only time the MM is going to want to take that kind of extreme VOLATILE risk (assuming the new montage creates this) is when the stock has hit 'highs' or 'lows'. Thus, institutions will themselves be hurt by the very system proposed to make things better for them. I also ask all of you this: How is MORE volatility better for the individual investor? The invidivual investor or daytrader now has to compete with the professionals on EVERY aspect. In my humble opinion, they can't be liking such a system. The only time the momentum players are going to get their hands on stock (because ISLAND will be included in the SOES feature) is when he DOESN'T want it (when the large order has just completed). The entire MOMENTUM daytrader game will be completely changed, if not completely gone. Essentially what this montage does is PREVENT momentum traders from getting ahead of them in any way. Think about that. That is among the MANY reasons I personally am AGAINST this entire system, because the big MM firms or institutions can put in HUGE orders and buy everything WITHOUT anyone else getting any stock until they are complete, unless they have order 'rotation' -- unsure on this point (Please note, though, I am FOR decimalization, obviously). Again just my thoughts. All the best, -- Gene