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At 05:02 AM 6/22/98 GMT, James F. Mazzulla wrote:
Jim
The mini S&P is doing very well and no pit, no locals thus no third party.
The speculator is whats needed for liquidity without him the current forum
couldn't survive nor could the locals are the commercials. Futures and the
NASDAQ and completely different.
A market maker in the NASDAQ is obligated to take at all times at least 100
shares on the stock he is making the market on are he will be fined and
lose his status. But in turn he trades and makes the market and passes it
on at a profit to himself so he buys at the bid and and sells at the ask
and the spread is his if you will. Nobody has any such obligation in the
futures market nobody and could never because they can't control the bid
ask. That is why its called open out cry and that is the only way the price
can be established and why its consider to be the fairest trading market.
So the speculator is the one who makes or breaks a futures market and there
plenty of futures markets with hardly any open interest today. Check out
the white wheat in the Minneapolis exchange you buy you might not be able
to sell it to anybody.
Robert
>I noticed that after you stated "....a buyer and seller is
>all that's needed" you added "we need the exchanges...". I
>agree but you're still missing one element; a third party to
>provide liquidity. They're called locals in the futures
>pits, market makers on a system like NASDAQ and it seems to
>me they're what everyone is referring to (albeit obliquely)
>when "fairness" is mentioned. Fact is they'll always be
>around in some form or another, like it or not, to take
>their "cut". Even if telepathic trading were possible, it
>would be useless if no one was willing to take the opposite
>side.
>
>The bottom line is that neither exchanges nor those who make
>markets can afford to provide their services for free. We
>have as much right to demand that as we do to demand that
>Wal-Mart sell their merchandise to us at cost.
>
>WRT seat prices, they're about as volatile as any stock or
>futures contract out there. Take a look at what they were
>selling for after the crash in 87. Prospective purchasers
>pull their bids, seat holders panic and hit anything in
>sight, etc........not much different than any other
>tradeable instrument.
>
>Best regards,
>Jim
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