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Strategies & Market Trends : Three Amigos Stock Thread -- Ignore unavailable to you. Want to Upgrade?

To: LTK007 who wrote (10934)	12/2/1998 6:52:00 PM
From: Sergio H	Respond to of 29382

Max and Amigos: Thought this article was worth posting. See reference to NAVR..... TRADING ANOMOLY BRINGS NASDAQ UNDER SCRUTINY Before we zero in on the focus of our feature article today, it may be worthwhile to pause and review how the NASDAQ market is meant to function. To this end, we provide part of an article we published in our SRG Club Newsletter in July. "Understanding NASDAQ Market Makers" One of the key features of the Nasdaq market is its use of Market Makers. Market Makers are basically securities firms that use their own capital to buy and maintain inventory of a particular stock, then resell that stock into the market. If an investor wishes to buy a particular stock on the Nasdaq, the order is sent to a Market Maker, who fills the order from their existing inventory of that stock. In the process, the Market Maker makes money on the "spread", which is the difference in the value at which they purchased the stock and the value at which they sold the stock. Each Market Maker must register in order to "make a market" in a particular company's stock. The Market Makers can make a market in as many different companies as they choose. There can be as few as two or three Market Makers for smaller companies and as many as 50 or 60 for large cap companies. Market Makers are registered members of the National Association of Securities Dealers (NASD) and are subject to strict trading regulations. For example, Market Makers cannot withdraw from trading a security without permission from the Nasdaq Stock Market and this permission is granted only for very restricted regulatory reasons. Some other regulations Market Makers must follow include: a guarantee to execute each order at the best price available; a commitment to buy and sell securities in which they make markets; and, a commitment to report publicly the price and volume of each transaction within 90 seconds of its completion. Having said all that, it would appear that sometimes the system does not work as well as it is meant to. Specifically, a feature article in the National Post ("Nasdaq market makers come under fire") spells out how the shares of Navarre Corp. closed at $12 on Friday and subsequently opened the day on Monday at $27. The Post reports that some traders have complained that there was not a proper matching of buy and sell orders and this has called the NASDAQ's Market Maker system into question. Given the importance of the NASDAQ to small cap investors, we encourage you to reference this article by using the hyperlink listed below. As the story plays out, we will provide further reports once NASDAQ officials provide more information. To view the report relating to this news event you may wish to try the following hyperlink: nationalpost.com tml You can read this great story and more at stockgroup.com