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

To: GrnArrow who wrote (3790)	11/5/1998 6:54:00 PM
From: bazooka	Read Replies (1) \| Respond to of 4969

steve, i must comment again on how happy i am to see a discussion on listed stocks (good questions Grn; i hope others post as well). let me add some more fuel to the fire. i understand that the PCX is open 30 minutes beyond the NYSE close. are the post-close prints i see going off coming from here or are they from instinet (or both). do the other regional exchanges have pre/post hours. whats your experience as to price improvement on the regional exchanges. PCX states: "Specialists at the PCX have been shown to improve the nationally displayed best bid or offer over 40% of the time." today on DOT, i put in an order at the bid and i didn't get filled until about 30 secs. later; however my fill was an improvement. was the specialist waiting for an offsetting order before crossing me? why wouldn't he just fill me at the advertised bid. how long does the specialist have to readjust his market when buyers are coming in and there are no sellers (or vice versa)? aside from super dot what are the other electronic ways to access the listed exchanges; (is there anything similar to how NAS stocks trade on ecns, etc?) does AMEX work the same way? as always your insight is appreciated. bazooka btw- i definitely would be interested in another chat session on this subject (i still have many questions to ask; you are the best resource i have found- i am very grateful)

To: GrnArrow who wrote (3790)	11/5/1998 8:41:00 PM
From: steve goldman	Read Replies (1) \| Respond to of 4969

I quoted your question below. see my reply with preceeding. > A stock is quoted 30 x 1/4, and prints are going off at 1/8 (this is all >on NYSE). I see two possible explanations for this: >1) Either the specialist or someone in the crowd has an interest in >buying (or selling) at that price, but doesn't want to reflect that >interest in the quote, and is executing against contra orders coming >in. Exactly.. A large client might give the specialist or a floor broker an order to work, not held, to sell at 30 1/4 with an 1/8 or with an 1/8th limit, not displayed. Rather than weighing on the stock, piling on the offer, the floor broker works it off the books. As well, a floor broker might be standig in the crowd and offering stock to buyers as they come to the booth. then the seller prints to the tape . >2) a buy and sell order comes in at virtually the same time and the >specialist pairs them off. The more prints that go off at 1/8 the less l>ikely this seems since it is unlikely buy and sell orders would r>epeatedly offset each other exactly. Could be..particularly if its a liquid, very liquid stock like, MER or LU or GE or IBM... Now...let's say 1700 prints at 1/8, and the bid upticks to 1/8 size 800. Would it be reasonable to assume then that there was an unstated seller at 1/8 who was just cleaned up by a buy order for 2500 at 1/8 (the remainder of which then became the new bid)? Exactly, though sometimes the specialist might fill the buyer of 2500 at 1/8, fill the 800 out of inventory to not have to change the quote to for 800 shares...now all kinds of third market prints might go off as a result of the changed quote..also, be sure its not a third market quote. OK... One more question in this scenario: I'm seeing prints go off at 1/8 and I decide I want to buy there, so I enter a limit order for 1/8. If there is a seller there taking out buy orders as they come in, I should get filled at 1/8 right away. But if it has been a buyer taking out sell orders, my order would now enter the book as the best bid. Since my bid is posted for all to see, do I now have priority over the person in the crowd who has been buying? (I assume if it was the specialist buying, I get priority over him/her) **Absolutely. Now the specialist might put up your bid and someone elses togather and you wont know exactly where you stand unless you enter a bid for 900 shares and see the quote go 9 x 30 (your 900 by 3k)...then someone might enter an order to buy 500 at 1/8..it will become 14x30. here you know you are first in line... in a very liquid stock it sometimes becomes difficult to telle xactly where a specialist puts your bid up....sometimes he needs a few secs to see if he can fill it and keep it off the books, not haveing to adjust the quote for the 900 small shares.... Nonetheless, it beats most market makers manning rules, 30 seconds to make it or post it....not that a true trader should utilize such a mm, but it is superior....not as fast as an ecn...but pretty good. It cant trade through you atleast once you put it in..or you then are entitled to a fill, whereas on nasdaq stocks, it could trade through you and there are 10 excuses you can get, none of which will get you a fill. hope that helps.. regards, Steve@yamner.com