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I do not subscribe to or have any relationship to the following. However, I
found it rather interesting to read of some of the differences in the pit
operation between the S&P and the Nasdaq futures pits.
Larry
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Subj: RealtimeFutures.com Squawk Box NEWS: JUNE
Date: 06/03/2000 2:45:23 AM Pacific Daylight Time
From: benlichtenstein@xxxxxxxxxxxxx (RealtimeFutures.com)
Reply-to: <A HREF="mailto:benlichtenstein@xxxxxxxxxxxxx";>benlichtenstein@xxx
ritech.net</A>
You are receiving this Newsletter since you are a Squawk Box Subscriber
or recently requested a free-trial of our service.
The month of May turned out to be no less volatile than the ones
before. We had a Fed interest rate hike, a few limit down days and
somehow managed to end it all right about were we started it.
The Memorial Day weekend gave us a reminder of how slow summer/holiday
markets can be. But before summer can officially begin, the floor
traders need to get past this month's rollover. This roll over, as the
past two, seems to be shaping up to be an early one -- already in the
first week of the roll over we have seen some decent movement and size
players. This gives me the impression that the major institutional
players will not be waiting until the last week to roll over.
RealtimeFutures.com launched the NASDAQ product this month, the first on
the market, and we have now had four solid weeks of quoting in that
pit. We are more knowledgeable about the major players and how and what
makes the pit move. If you didn't get a chance to listen to the NASDAQ
Squawk Box the first week we launched, send in a trial request and we
will give you a temporary User ID and the NASDAQ host name.
The NASDAQ pit while very similar to the S&P's, could also be described
as the exact opposite. The spread (the bid and the offer) tends to run
five handles wide. For instance 70 bid at 75 is a five handle wide
spread. Each handle is the equivalent of one hundred dollars therefore
making the spread five hundred dollars wide. Locals keep it wide for
obvious reasons.
In the NASDAQ as with the S&P, the order fillers stand on the top step
and the locals are in the center of the pit. The actual pit is about a
quarter the size of the S&P, but it is deep. The trade tends to be very
slow at times and choppy. The ND pit traders and the orders fillers
that work it have yet to really find a rhythm. It is not uncommon that
trades occur below an existing bid or above an existing offer. This
slows down the flow of the pit. The pit traders/locals argue about the
fill first; then the pit reporter has to take the trade out of the
system; and lastly, the trades have to be broken in order for the
eligible bid or offer to be filled. All of this takes time and energy
out of the trade. It is my opinion that this sequence will become less
cumbersome as the pit population learns each other's voices, styles of
trading, etc.
We look forward to watching the progress of this pit. I feel it has a
great potential for growth. It needs a bit more liquidity, which should
comes in time, but the volatility is already insane.
Please feel free to contact us should you like to request a free trial
on the NASDAQ.
We trust you continue to enjoy the service. We look forward to hearing
from you.
Best Regards,
Ben
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