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I appreciate the knock-on effects you explained, but frankly, they do
a little bit smack of bad system design: "Oh, if X happens, Y and Z
will follow, and it's Y and Z we can't handle because we didn't allow
for it upfront."
Besides, if someone taking advantage of the derived part of an order
causes the market maker pain, then that's probably self-inflicted.
To someone who runs an exchange I would say (with all due respect of
course) that what you're seeing here is a market in action and to
stand in its way like this is probably not a good idea in the long
run. Markets will find a way to do what they want to do.
As an aside, you said:
"make a market in size and don't pull it on a situational basis"
At one end of the spectrum is bettering a spread for a one-lot order,
at the other end is full-blown market making in guaranteed minimum
sizes. Where's the demarcation line and why should I have any
compunction about being on one side or the other of that line ?
Markets thrive on differences of opinion, and if a market maker gets
annoyed or worse by people sniping into the middle of his spread, he
can do something about it - tighten until the "nuisance" goes away.
Anyting else is manipulation.
IMHO.
--- In realtraders@xxxxxxxxxxxxxxx, "Jacobson, Alex" <AJacobson@xxxx>
wrote:
> As someone who runs an exchange these are not the relevant
arguments.
>
> Bandwidth is a bit of an issue, but the real issue is the derived
order.
> The liquidity providers in options are there all the time. Feel
free to
> better a market, but make a market in size and don't pull it on a
> situational basis.
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