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

To: Robert Cohen who wrote (1103)	9/27/2000 4:02:26 PM
From: LPS5	Read Replies (1) \| Respond to of 1426

Hi Rob, I really can't, because it varies from firm to firm. The variance of inventory size is rooted in a particular firms' capital position, their tolerance for risk, general trading strategies (perhaps "philosophies" is a more apt description), and the order flow they've got. The decision about how much capital to allocate, what stocks to make a market in, and the like are a result of several factors: first, the institutional memory of the firm (are we aggressive risk-takers? do we trade because it suits our bread and butter, investment banking clients? a mixture of both? or do we do it only because we "have to," to be competitive?). There are also risk committees, strategy committees, and the employment of models by both which, at given points, may indicate that expanding or contracting a proprietary or dealing operation are in line. And, in some smaller - or large and entrepreneurial - firms, the recommendations of individual traders, not just desk heads and committees, may be taken. LPS5