Commentary

Sachin Barot
Traders Magazine Online News

Cannabis Corner: Part 2 - Cannabis in America – A Winding Journey

In this second part of our exclusive Cannabis Corner series, CERESLabs Barot delves into the beginnings of the cannabis market in the US, then onto its criminalization and to the present where its rapidly becoming legal.

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August 31, 2001

A Chinese Menu For Market Makers: New Systems for New Generation of Regs

By Peter Chapman

"We're almost not going to allow you to become uncompliant with certain types of orders," said Bob Coppola, head of Bloomberg's product strategy group.

Limit order display rules are taken seriously. If an order is not displayed by the trader in one-and-a-half minutes, for instance, then it is automatically displayed. The system will override the trader's own quote management. The parameters are set by management.

Where's the Depth?

Size at the inside is harder to come by now that trading is conducted in penny increments. A trader might find only 100 shares at the NBBO. True' depth may reside two or three levels below the NBBO. If a trader gets a relatively large order - say 1,000 shares - he would be hard-pressed to fill it at the NBBO. He'd incur an unwanted loss when laying off the position. What does he do? SunGard's SmartBrass includes a feature that will automatically take out all the quotes/orders at the top of the book until it uncovers enough size.

The system will then automatically execute the customer's order.

De-Fragging Nasdaq

Penny ticks have caused liquidity to disperse to more price points. That has traders clamoring to see every possible quote on the ECNs. Their NW II screens only display top-of-book orders from the liquidity-rich ECNs. The first OMS vendor out of the gate to consolidate all quotes from every Nasdaq market center is Nasdaq itself! Nasdaq Tools, formerly Tools of the Trade and now a Nasdaq subsidiary, has incorporated an ECN Consolidator' into its system, Tools Plus.

On one screen, traders get every quote posted by most ECNs and the NW II montage. Most, but not all. Some ECNs (Instinet is a notable example) have denied their distributors free access to their quotes. Tools Plus also consolidates quotes from the two OTC markets - the Bulletin Board and the Pink Sheets.

Drag the Book

If Greenspan cuts rates in a surprise move and the market starts going crazy, traders at Salomon Smith Barney can cope. Salomon's GATE lets them drag their entire book and instantly change every quote of every stock they trade. Or they can instruct it to buy 1,000 shares of everything, for instance. "You can do that quickly and easily to defend yourself against what's going on in the market," said Amit Chatterjee, deputy head of equities e-commerce at Salomon.

One Less Step

Now that SuperSOES is a reality, Nasdaq trading is faster than ever. So, traders need to be quicker on the draw. Bloomberg's new OMS cuts out a step in the trading process, giving traders faster access to the market, according to executives. Traders can sweep the Street or preference a particular broker from anywhere in the system. They don't have to first call up the security to run the function. Because the OMS includes a blotter that handles all their securities, traders can, at any time, click on any security and sweep the market. The blotter allows them to run all sorts of functionality from adjusting quotes to sweeping the market from anywhere on the system, according to execs.

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