|
PureBytes Links
Trading Reference Links
|
Your reply speaks for itself. Prov 14:7 comes to mind.
ADC
----- Original Message -----
From: <felixty@xxxxxxxxxxx>
To: <realtraders@xxxxxxxxxxxxxxx>
Cc: <realtraders@xxxxxxxxxxxxxxx>
Sent: Sunday, March 05, 2000 12:29 PM
Subject: [RT] Re: Open Outcry or Computer System
> well..in any exchange whether outcry or computerize,there will always be
some
> illiquid instruments and definitely the price quotes for bids and ask are
at a
> distance,even in our electronic exchange there are these illiquid shares
too!
> there's no advantage/disadvantage whether it is outcry or computer
> terminals..the quotes are far..well put it like this..in the zoo....if
peepol
> wants to hand feed the monkeys,deer (meaning more liquid) its safer,if
they
> wanna feed tigers,sharks,alligatos and lions cages (meaning less liquid
> instruments) definitely there is more danger/bigger risk..its their fault
they
> wanna feed (trade) the dangerous cages. so whether its outcry or computer
they
> sharks still bite the same and naughty people do gets to be biten.
>
> About risk by floortraders.yeah.....the risk of getting caught in the act!
>
>
>
> Anthony Denis Cattani wrote:
>
> > The real justification for open outcry is liquidity and having risk
capital
> > instantly available to moderate market moves and price shocks. Many
markets
> > work well as strictly 'electronic', for others it is the reverse. For
> > moderately traded markets, electronic trading is bad for most
participants
> > with the exception sometimes being the commercial element.
> > Electronic markets need several key ingredients to succeed.
> > First, a widely diversified, large crowd of participants. If a market
> > operates within a specialized crowd, then having risk capital in the pit
> > makes all the difference. For such markets to migrate to electronic
trading,
> > they would in all probability loose such risk capital to other more
liquid
> > markets.
> > Second, markets need a critical mass to generate the following needed
to
> > succeed in the 'E' environment.
> > Third, markets need some sort of volatility to entice their 'crowd'
to
> > stay.
> > That the role of floor traders has been given a bad name is an
> > understatement. But like all professions, it applies to a very few.
> > Surveillance systems in place at all exchanges guard against almost all
of
> > the past abuses.
> > For the vast majority of floor traders, the service provided by
accepting
> > risk and providing liquidity is the grease that keeps the wheels
turning.
> > The fact that the 'grease' is available on a split seconds notice in the
pit
> > makes a huge difference over the course of a year in money saved, for
all
> > involved.
> > To assume that floor traders assume no risk is a grossly uneducated
> > statement. All market involvement comes with attached risk. I could go
on
> > for several pages on this one topic alone. Suffice to say that floor
traders
> > and locals frequently take it on the chin along with the 'others'. The
> > difference is that they are 'there' making a market and are able to act
on a
> > moments notice, something that is difficult if not impossible to do when
> > trading off of a 'box'. This combined with much lower transaction costs
> > justifies many traders to pursue the life of a local.
> > The big push for electronic trading is a push originated by both
> > regulating bodies (for the audit trail), and in many cases by the
exchanges
> > themselves. You see, when an order is traded on an electronic exchange,
the
> > exchange can charge a higher fee. Think this one through. Initially you
> > would think that reverse would be true, but here is the reasoning. The
> > market participants save bundles on fixed costs (floor staff, brokerage,
> > booth rentals and all the related expenses of a floor operation) and it
is
> > these savings that the exchanges try in part to capture.
> > My conclusion to this is that for some markets, electronic trading is
> > both a boon and a blessing, for others it is a death knell, and a window
to
> > exploitation.
> > Have a great day all. Here in the high planes, the mercury is soaring,
the
> > geese are back (two months early) and I'm heading out for a nice brunch
with
> > the family.
> >
> > Anthony Denis Cattani
> >
> >
>
>
|