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This is a clear violation of a number of exchange rules. Both on the part of the MM
and the broker. In all fairness I kind of want to believe that the story is
fiction.
As to viewing stops ... if floorbrokers reveal their inventory to the MM .. not only
are they violating exchange rules, but they are violating their responsibility as to
protecting their customer. The broker in this alleged story is a crook as is the
market maker.
In the world of electronic trading this is the kind practice that would become
somewhat more difficult. An electronic book "could" then exist(as it does it CBOE
now)so that everyone could see the available size and depth of the resting limit
orders. Right now the electronic book lives side-by-side with the inventory in the
broker's deck's. The role of the broker is already changing as few brokers actually
even use "decks" anymore, their inventory is carried on a workstation which
customers can access electronically.
nwinski wrote:
> MS wrote:
>
> > Brent,
> >
> > You happen to be right ! I clerked for a market maker in the OEX pit,
> > and I was privy to the conversations he would have with the traders for
> > the brokerages around him. He was given info as to orders that were in
> > their decks. Most of the trades the market maker did was with the
> > brokerage traders near him. There was one time when a trade occurred
> > after the close, inwhich a trade was made between my local and this one
> > brokerage trader. My guy benefited by $9K.
> >
> > mark,
>
> I am a former CBOE market maker. The behavior you described is unethical
> and I a faiirly sure it is also against exchange rules. Perhaps we could get a
> ruling from the good Dr. OEX on this point? I am sure that trading after the
> close, i.e. private trading outside normal exchange hours is against exchange
> rules. I am sorry that your employer proved to be such a poor example of how
> business should be conducted on the CBOE floor.
>
> Ethically,
>
> Norman
>
> >
> >
> > BrentinUtahsDixie wrote:
> > >
> > > Not having any actual experience in the pits; I think that there is some
> > > evidence that the traders there DO have access to information on where stops
> > > are. Here is some reasons why.
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