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Strategies & Market Trends : From the Trading Desk -- Ignore unavailable to you. Want to Upgrade?

To: TFF who wrote (2176)	12/30/1997 8:46:00 PM
From: Robert Graham	Read Replies (1) \| Respond to of 4969

All of this disussion about the MM and why it is not worth having a MM inform us about how market makers handle their job is missing a very important point. You cannot eliminate the role of market maker. IMO if anyone thinks they can, then they do not understand how the markets work, and more importantly, what provides for a working market. The market maker takes the other side of a trade. The provides liquidity in the marketplace which is essential for there to be a woking marketplace for the trading of stocks. So market makers do much more than "tally the orders". They are there to insure that the orders will get filled. The only way they can do this is by being willing to take the other side of an order. The only other option is to go to a listed exchange format that uses specialists instead of market makers. I do believe this approach would be the best. Matter of fact, lets do what the Toronto Exchange does: computerize the specilaists book and open it to the public. What a concept! There are other advantages to the open outcry method of marketing stocks. For one thing, everyone is int the position to see what everybody else is doing. In this isutation, it is much less likely that a particular trader or specialist will get away with anything that would work against a fair, equitable system. I do think this discussion is starting to remind me of a person cutting their nose off because of the mole that has grown on top of it. You may not need the mole and desire to ride youself of it, but you do need your nose to remain intact. Also, I think it is pure foolishness to not take advantage of a market maker's knowledge of what actually occurs in the market making process, and in particular to understand the games that the MMs play. You can never stop human beings from working a system to their (exclusive) advantage, but you certainly can edjucate yourself and others on what these people are doing to promote their self-interest. This is essential information that can be used to deal with the problem much more intelligently and effectivey than wishing it would "go away". I suspect there are people here who are not in a position that requires them to take the market seriously. Otherwise, they would be able to more clearly see their situation as simply "themselves against the market" and handle their situation from this pragmatic view. The market does not owe aybody anything at all. But there are still many people out there who are not MMs but still making allot of money in the NASDAQ marketplace despit those nasty MMs. Go figure! Bob Graham