Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Momentum Daytrading - Tricks of the Trade -- Ignore unavailable to you. Want to Upgrade?

To: Doug Coughlan who wrote (1717)	12/19/1998 9:08:00 AM
From: J D B	Read Replies (1) \| Respond to of 2120

Doug, that's interesting: illegal to post a bid that is higher than the ask? What is the illegal part: (1) my placiong a bid higher than the ask or (2) a mm posting that bid? Dave

To: Doug Coughlan who wrote (1717)	12/19/1998 7:10:00 PM
From: Kimberly Lee	Read Replies (1) \| Respond to of 2120

There is nothing inherently illegal about locking or crossing the inside market during regular trading hours. A market maker can cross/lock inside market if he has a large size order and he has sufficient reasons to believe that the current inside quotes will not be able to fill his order. A hypothetical illustration: DELL 67 x 67 1/8 GSCO on the inside bid, size 10, MSCO at the offer, size 15. A big client suddenly calls Goldman and want to buy 90k at the market immediately, giving GSCO no discretion (rarely happens in real life, but I am using it just for the example). GSCO can raise the bid to 67 1/8, showing size 900, locking the market. Or GSCO can raise the bid to 67 1/4 or even 3/8, showing size 900, crossing the market momentarily. Of course this will take out MSCO at 1/8 in seconds unless the latter has a much larger reserve size at 1/8.