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Strategies & Market Trends : The Final Frontier - Online Remote Trading -- Ignore unavailable to you. Want to Upgrade?

To: LPS5 who wrote (8609)	1/11/2001 5:29:37 PM
From: LPS5	Respond to of 12617

This is the message I posted 8 or so months ago. Message 13236277 LPS5

To: LPS5 who wrote (8609)	1/11/2001 11:05:10 PM
From: Gary Korn	Respond to of 12617

I'm of the same view. If one truly risks being hit against one's bid, even if there is no intent to keep the bid live, then how can this be illegal or deceptive? Gary Korn

To: LPS5 who wrote (8609)	1/13/2001 4:32:26 PM
From: Dan Duchardt	Respond to of 12617

LPS5, Traders require the ability to cancel an order whether it's been on the box for 30 or .5 second(s), given that market changes often occur at what seem like superluminal speeds. Of course, some market participants using certain execution mechanisms have been deprived of that canceling ability for some time (SelectNet 10 second rule), which is one of the reasons ECNs enjoy their current popularity. Not to argue whether that should or should not be, but I wonder what effect it would have on those dramatic and sudden market changes if all quotes/orders were required to remain live for some minimal period like 10 seconds. An interesting wrinkle would be to allow such orders to improve (raise bid or lower offer) but not be withdrawn so that "legitimate" interest could follow the inside market if it starts moving away, but not run for the hills if the market comes to it. I have to say, unless it's part of a verifiable attempt to engage in a quasi-"tape painting" effort, there's nothing wrong with it at all. As for current practice, I agree that orders that are subject to liability as long as they are being displayed are legitimate, even when flashed. I have a lot more heartburn with dormant MM quotes being used to stall the market than I have with flashing ECNs to juice it. I often wonder though about this tape painting business. There is little doubt that ECNs are being used more and more by dealers to trade the opposite side from their inside market quotes. I assume that as long as they are not hitting their own quotes, there is no "tape painting" going on, but with auto routing algorithms such as those used by ARCA and REDI, what is to prevent this from happening? If I were an MM wanting to buy, why not put up 100 shares for sale with a 15-17 second delayed refresh cycle and send buy orders to these systems at that price? If I get hit by my own order, what do I care? If I can hold the market from moving, other sellers will join me soon enough and I can accumulate stock from other sellers. It's not much of a stretch to go from that to a faster refresh cycle using the same ECN/routing systems to generate activity in hopes of pushing the market higher. Am I "buying my own stock" if my ECN order just happens to hit my own offer? Can a MM legitimately send buy orders to an ECN at or above the same price as his published offer? Dan