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Robert W Cummings wrote:
> 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.
Here's how this should work. You, as a MM or anyone else, post a bid at a
specific price and size. Therefore, in doing so, it should be available to be
hit on. It doesn't always work that way, however, but eliminating this would
hardly be unfair to anyone. I agree that MM's ought not to be subject to
excessive constraints - the same ones as other traders deal with would be fine.
> Nobody has any such obligation in the
> futures market nobody and could never because they can't control the bid
> ask.
So - you are saying that futures traders can continually post phantom orders?
If they are allowed to make a market without executing anything, they won't be
missed for sure. Surely this isn't what you mean here.
> 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.
I don't follow you here. The only real difference between the two is that the
process takes place electronically as opposed to in a zoo <g>.
> 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.
Not sure of the significance of this. I take it that the Minneapolis exchange
is electronic? (I've never heard of it frankly). If so, I still don't get the
connection here between electronic trading and lack of liquidity. I can't
imagine how it could decrease in this setting anyway.
Regards,
A.J.
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