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Non-Tech : Market Makers - What They Do and How They Do It -- Ignore unavailable to you. Want to Upgrade?

To: lifeisgood who wrote (32)	1/18/1999 3:32:00 AM
From: AlienTech	Read Replies (2) \| Respond to of 429

>> I already trade through datek. If they avoid trading through MM, who makes the money the MM would have otherwise made? Datek?? Is that how they can run a profitable business and only charge chump change for a trade??<< If the trade happens entirely through ECN's you make the money, EG you want to sell DELL @ 72 through ISLD, someone else wants to buy DELL @ 72 1/4 through INCA. Now using an ECN this trade will not happen unless one of you decides to match the price of the other. So one decides to sell @ 72 and you get your fill. Using an MM here, You will not get your fill unless you decide to buy @ 72 1/4. So how you look at it, instead of 2 loosers you only have 1 looser with an ECN. And having L2 does not help here. ETrade still uses MM's. Schwab gives you much better filles since they are so much larger that a lot of times, they can fill you in house rather than go to a third market and split the difference of the spread between their own custoners, IE you might get a price of 72 1/8 on the buy and the other will get a price of 72 1/8 on the sell. or if they did use their own MM you might get 72 1/16 and he would get 72 3/16 and their internal MM would get the 1/8 spread. Still better than the normal you paying 72 1/4 and him selling at 70 in effect the mm making a spread of like 1/2. I am just using examples here.