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To: zurdo who wrote (72878)	10/19/1998 2:19:00 AM
From: nihil	Read Replies (1) \| Respond to of 176387

Zurdo, I was being ironical -- please read the rest of the paragraph You are quite right to be suspicious, but it is counterproductive I think to give in to fears that are are unlikely (or low frequency) -- as the fear that two guys will enter into a price-fixing scheme (and consequently not trade at all). This is the trader's fat-tail problem -- he overestimates the probability of unlikely events and avoids risky but potentially profitable trade, while the mathematical finance whiz underestimates the risk and ultimately has to melt down his Nobel medals to meet a margin call. You may be quite right, but while you are focused on the unlikely terror, some public trader picks your pocket by front-running your limit order, which he can do without conspiracy or discovery (as long as he is allowed to trade for others and for himself). I think that was the main problem with many of the market manipulation charges again commission houses and market makers. The market maker will usually trade for himself or a small firm, where what he steals is his own (as God intended), while the agent of a large firm has little inducement to steal on behalf of Merrill Lynch, unless it has been dumb enough to set up targets and incentives that require the trader to come up with spectacular results year after year (which it has). Off-exchange options traders ought to fuss to the authorities, use the cheapest brokers obtainable, fight for the spreads, and support the development of completely computer-based markets. Thanks for the reply.