If the market makers wanted us to see what and who was really in the market, they'd provide lots more data on who the players are in a stock, what trades are moving in blocks and a whole lot of other very useful information that simply isn't provided by Level II.
Market makers don't want each other to see what they're doing, let alone anyone else. As I've previously mentioned, to characterize any particular firms on Wall Street as wanting to share with one another is completely laughable. I'll tell you, Duray: for the proponent of a theory that grounds itself in the insatiable greed of men and their institutions, you miss the reality of the situation by not seeing, however you claim to, the full implications of avarice from houses small to tall.
The Level II information is supplied by NASDAQ, and on top of dealers justifiably not wanting anyone outside their company seeing what's going on, there are institutional interests above and beyond the various dealers of various sizes who have a vested interest in not letting other concerns see what they're doing. So proprietary are they about this information, in fact, that they often split orders up across the Street, or use ATS, or use DVP accounts, or trade offshore, or construct OTC derivatives, or any combination of the aforementioned tactics, among others, to keep their activities secret.
And that's a good thing! You mentioned 401K holders, widows and orphans; ironically, in fact, all of whom are, in most cases, direct beneficiaries of those same secrecy-craving institutions. They include investment companies (under the Act of '40, most of which are commonly known as "mutual funds"), pension funds, endowments, and state trusts, among others. If daytraders, proprietary traders, hedge funds, competing securities firms, and all the other various and wonderful organisms operating up and down Wall Street knew what they were doing, well, you can just imagine how quickly spotted opportunities would disappear. And how quickly, for the firm charged with executing the order that ran away, those institutional calls would gravitate to other firms.
And both poor execution quality...and a high rate of portfolio transitioning...would be bad for our mutual funds, 401Ks, pension funds, state investment funds...ad infinitum...and the hundreds of millions whose financial security are entrusted within them.
As the biggest pigs at the trough, the underwriters write the laws that make it a certainty that they always come out on top.
I don't think the underwriters are pigs, personally...at least, not more than any other businesspeople out there. I mean, most people who might call Wall Street firms "greedy" would, asked if the government should cap or otherwise restrict some other sector's profit margins or revenue potential - deride that as some horrific new wave of socialism. Justifiably, IMHO.
To me, Large Firm A underwriting WorthlessTech.com (no revenue, no earnings, blowing through tens of millions a month) is just giving both WorthlessTech.com and its' customers what they're asking for, lest Large Firm B get that business.
But the people - retail or institutional - who, either not doing their due diligence or drooling over the first day, triple digit returns in other new issues throw caution to the wind and leap in with both feet...well...oink oink. That's my opinion; like I said, there's no shortage of books on fundamental valuation. :)
So. Why don't you you provide a link to the text of a "law" which was "written" by [an] "underwriter[s]" which, with "certainty," ensured that they would "come out on top," Duray?
And, in fairness, you might want to define "underwriter," and "law[s]," first - as you see them. Perhaps even define, qualitatively and/or quantitatively, what "coming out on top" implies for an "underwriter."
:)
LP. |
