posted
Unsolicited Quote An unsolicited quote is one which represents an "Unsolicited Customer Order". Publishing unsolicited quotes allows a broker/dealer to meet an exception to Rule 15c2-11, which requires a broker to have in its possession current information, including financial information, about the issuer of the securities . To avail itself of this exception to SEC Rule 15c2-11, an NASD member firm must ensure that the quotation published or submitted: (1) is solely on behalf of a customer; (2) represents the customer's indication of interest; and (3) does not involve the solicitation of the customer's interest.
According to the above, it does in fact state that the quotes must be solely on behalf of a customer.
Posts: 596 | From: New Jersey | Registered: Apr 2006
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posted
private message -- go to "my profile" at the top of the page and you can get it from there -- only reason I sent it, is becasue the link will be x'd out on the man page
Posts: 1343 | Registered: Nov 2005
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I was an OTC MM for about 10 years ending in the late 80's. Since then I have been strictly an investor. Since I have not been that up to date in MM rules I will only make statements that I feel fairly confident are still accurate regarding these activities. By and large most MM don't have a clue nor do they care to learn, about the fundamentals of the stocks they trade.
They just try to make orderly markets. When dealing with BB stocks it is very easy for a MM to get trapped into being short in dealing in a fast moving market. Reason being; most of the MM's in this stock are what are called "wholesalers" this means they don't have retail brokers "working" the stocks.
So they have to rely on what's known as the "call" from larger retail houses. If a "Big" retail firm like an E-trade calls up a market maker to purchase say 5,000 shares of a stock, they expect to get an "execution" from that market maker. If he turns them down, or only gives a partial then the "Big" firm will go to another MM.
If this second MM "fills the order" then that "Big" firm has a moral obligation to continue to give future "business" in that stock to that MM who performed (his life blood). This will go on until he "fails" to perform and so on.
Contrary to popular opinion the "Big" firms Do NOT neccessarily go to the "Low Offer" to fill a buy order (Or high bid for a sell). They "Go" to who they think will perform to fill the order and expect that MM to "match" the "low offer" in the case of a buy (bid in the case of a sell). Even though this MM might in fact be the "high bid" and not really want to sell any more.
As a wholesaler he must perform or he will get a reputation as a "non-performer" with the "Big" houses and will cease getting "calls" which means he will soon go out of business. I mentioned above that this activity is very significant to BB stocks. I say this because most of the trades in these BB stocks are "unsolicited" and are done through discount houses.
With the above groundwork laid, let me try to explain how market makers get short even if they like the Company; Lets say that a stock (shell) has been lying quietly at $.25 bid $.50 offered. A limit order comes into one of the MM's to Buy at $.50 for a thousand shares. Prior to this trade that MM may be "flat" (neither long or short any shares). He fills the order and is now short 1,000 shares. He may raise his bid hoping to find a seller to "flatten" out his position. But before he realizes it a wave of buyers have come in and cleared out all the $.50 offers. Now the stock is $.50 bid .75 offered. Here comes that "Big" firm he just sold the 1,000 shares to at .50 with another bid for 1000 at .75. He makes this print. Now he is short 2,000 at an average of .625. The market keeps moving and now its .75 bid 1.00 offered. Now he has to make a decision.
Just like investors, MM Hate to take a loss. So 9 times out of 10 he will now sell 2000 at 1.00 making him short 4000 but with an average .81. At this time he would love to see a seller at .75 so he can cover his short and make a few bucks.
But instead the market keeps moving up. Now it is 1.00 to 1.25 and here comes the buyer again at 1.25. He doesn't want to lose the call so now he needs to sell 4,000 at 1.25 to keep his break even point above the bid. Now he is short 8,000. Market moves up to 1.25 bid 1.50 offer here comes the buyer now he feels he must sell 8000 here because "stocks don't go up forever".
Now he is short 16,000. And so on and so on. If the stock keeps moving up, before he realizes it he could be short 50k or 100k shares (depending how big his bank is).
Finally the market closes for the day and on paper he may look all right in that his "break even" price may be around the closing price. But now he has to figure out how to entice sellers so he can cover this short. It is important to note that if this happened to one MM it has probably happened to most all of them.
Some ways MM's entice sellers; Run the stock up with a "tight spread" in a fast market, then "open" up the spread to slow down the buying interest. After it has "cooled off" for a little while lower the offer below the last trade right after a small piece trades on the offer then tighten the spread so that the sellers feel they can take a "quick profit" by "hitting the bid" on the tight spread.
Once the selling starts the MM's will walk it down quickly by only making small prints on the way down with the tight spread. Another way is by running the stock up in the morning, averaging up their short then use the above technique to walk it down in the afternoon.
Hopefully after doing this for several days, it will demoralize the buyers. The volume will dry up and the sellers will materialize thinking that the game is over.
Contrary to popular opinion, MM usually Do Not Cover in Fast moving markets either Up or Down if they are short. They Short More. They usually try to cover after the frenzy is out of the market. There are many other techniques they use but the above are the most popular.
This technique works about 9 times out of 10 particularly in a BB market. However that is because 9 out of 10 BB stocks are BS. Remember what I said above. Most MM's don't have a clue as to the value of a Company until they get trapped. If the Company has solid fundementals and a bright future. Then the stock will do very well. And the activity that caused the situation will prove to even help the future stock activity because it created an audience."
-------------------- The difference between genius and stupidity is that genius has its limits Posts: 10204 | From: NYC | Registered: Mar 2006
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quote:Originally posted by J_U_ICE: Ways Of A Market Maker...
I...... the most popular.
This technique works about 9 times out of 10 particularly in a BB market. However that is because 9 out of 10 BB stocks are BS. Remember what I said above. Most MM's don't have a clue as to the value of a Company until they get trapped. If the Company has solid fundementals and a bright future. Then the stock will do very well. And the activity that caused the situation will prove to even help the future stock activity because it created an audience."
But this story is all about stocks that have gone up. That would make sense because the price of the stock is much higher and when the investors do make a profit they will sell at higher prices to allow the MM to cover their positions. The market maker still profits as he's buying back shares cheaper than he sold them.
The inverse would be true when an MM is long (buying shares as the price goes down into the ground (sub penny)) and he's got to now SELL back shares at a lower price, but still higher than he bought them. The market maker is the one putting bids and asks in. He's not going to take a loss because he's the one in control of the game.
So that story doesn't coincide with any logic of why a short squeeze would occur on most any of these securities.
There's a difference between shorting the stock outright and making a market in the stock by playing both sides. That's more hedged than anything.
A market maker can pull a bid or ask at any time to slow down buyers and sellers and these market makers are big time investment banks. So that story from the 80's really doesn't have any relevance now, 26 years later, because these investment bankers are the market makers in these stocks.
Now if these market makers are truly shorting stocks outright by borrowing shares from another MM or investment bank, that would be a more viable explanation for me than the story that was posted.
Sorry, it just doesn't make sense to me.
But don't listen to me anyone, I am just a basher who is long in this stock at 225,000 measely shares.
Posts: 137 | From: Private | Registered: Jul 2006
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posted
a nice little uptick maybe we see some action
-------------------- The difference between genius and stupidity is that genius has its limits Posts: 10204 | From: NYC | Registered: Mar 2006
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-------------------- The difference between genius and stupidity is that genius has its limits Posts: 10204 | From: NYC | Registered: Mar 2006
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posted
feeling a move for the 38th time. i hope its real this time!! come on!!!! lookin good!!
Posts: 2794 | From: nyc | Registered: Aug 2005
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quote:Originally posted by juice: feeling a move for the 38th time. i hope its real this time!! come on!!!! lookin good!!
It's only the 38th time seems like 3800th time
-------------------- The difference between genius and stupidity is that genius has its limits Posts: 10204 | From: NYC | Registered: Mar 2006
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quote:Originally posted by New_Ventures: hey Juice, anyway you can change the thread title ??? to more of a current pps ?
Good idea I'll see what I can do.
-------------------- The difference between genius and stupidity is that genius has its limits Posts: 10204 | From: NYC | Registered: Mar 2006
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posted
MM lineup on the bid:UBSS at .0016; NITE at .0014; and VNDM at .0005. On the ask: NITE at .0017;UBBS and ETRD at ..0018; HDAN at .006; and my personal favorite, FRAN at .07.
Posts: 1343 | Registered: Nov 2005
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-------------------- The difference between genius and stupidity is that genius has its limits Posts: 10204 | From: NYC | Registered: Mar 2006
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posted
holy smokes any one see the trades after the bell --- 8075000 shares traded (bought) at .0017 after the bell.
Posts: 1343 | Registered: Nov 2005
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