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

To: Dan Duchardt who wrote (1275)	12/5/2000 1:07:21 AM
From: $Mogul	Respond to of 1426

Great post Dan...it is obvious NASDAQ s trying to eliminate the ECN's by combating them with some of there own medicine.... but this is a convaluded attempt to get the dealers to face off the ECN's in execution for there own best interest..i agree with your ascertation 100%.

To: Dan Duchardt who wrote (1275)	12/5/2000 8:56:32 AM
From: Apakhabar	Read Replies (1) \| Respond to of 1426

Hi Dan, I agree with much of your post (about how the MMs wish to marginalize the ECNs) although ECNs are not as transparent as you think: "what you see is what you get." Most ECNs have the same reserve feature that MMs use so you might 200 offered on BRUT, for example, while 20,000 shares get sold at that price. Meanwhile Island has its hidden orders. But mainly I question the usefulness of "transparency" to traders in general. I want the market to be deceptive. That is where a trader's skill can be worth something. If there weren't "secrets" in the market, where would the inefficiencies that traders need come from? Technical analysis is predicated on the very idea that stock prices respond to decisions made by people who know information not available to the public. Contrary to the Etrade commercials ("What if there was a world with no secrets? Well, the stock market would be a better place.") greater transparency in the stock market would very likely mean less volatility and a worse environment for traders. On a side issue....as for MMs "holding up" a price increase by only executing one SOES order every 17 seconds... isn't this is a non-issue for traders? If anything it gives traders a time-out for strategy. The MMs can't stop a real move anyway. You can SNET them for an order way larger than what they're showing and they have to fill or move within a reasonable time. Who is hurt by a MM filling SOES orders slowly and slowing down a spike? That's what I'd like to know.

To: Dan Duchardt who wrote (1275)	12/5/2000 5:23:08 PM
From: gene_the_mm	Read Replies (3) \| Respond to of 1426

DAN... Perhaps you missed my point. You make it sound as if I am begging the question "What are the ECN's so upset about?" This may not have been your point, but I am vehemently against the proposed systems because, as you eloquently put it, only benefit specific MM's. Namely, the larger firms with the gargantuan orders that they want to squeeze more profits from. I agree with you that the ECN's that helped build and reinforce the NASDAQ as a legitimate market are the very same participants being detrimented by these proposed changes. My point was that NASDAQ appears to be trying to reinvent itself into a large crossing network, albeit still an inefficent one that WILL NOT cross SUPERSOES stock (meaning SOES buyers and SOES sellers will not be crossed against each other - possibly due to programming issues, though I would like to see this issue taken care of at some point). I also agree with you that stale quotes are a problem in NASDAQ and that the SUPERSOES system appears to remedy this. We are on the same page regarding that. I appreciate your posts and informative input, though sometimes I feel you view anything I write as adversarial. I wouldn't be here posting if this were the case. I am here to learn as much as anyone else. On that note, I will give my thoughts on the system as a whole once it finally implements and I have a clearer picture of what the new system(s) mean to all traders. One final point... NASDAQ has given the option to ALL participants regarding how one views ECN pricing included in the montage. Thus you can opt not to see pricing with ECN fees or with these charges factored in. I personally think there is nothing unfair or deceptive in what NASDAQ has done regarding this. If an ECN is going to charge a fee (some charge as much as $.03125 per share), I want to know if there is a better execution route. If any of you are professional traders, you ALL are billed these ECN costs back to you one way or another. For market makers, they are OBLIGATED to print against a lot of these ECN's for their customers. If you are going to have order handling rules (which I 100% agree with), you can't have it both ways. If I have to compete with an offering and take stock to fill a customer limit order I should NOT have to lose money on all of these trades (if you have to pay 1/32 on 5000 shares why should the market maker lose $156.25 in ECN fees?). Say what you want about how you feel about market makers (you have made it quite clear your 'dislike'), do you really think they should lose money on all limit orders? Thus I again believe NASDAQ has done the right thing on at least this issue. We all have our opinions though. Thank you for your response and I look forward to further debate regarding the pros and cons of this system with you and others. All the best, -- Gene