Free Site Registration

Big Brother Is Watching: The regulators are snooping more than ever for evidence of market manipula

Traders Magazine, December 2001

Pat S. Conti and William M. Mann

You are a market maker in WONC. The inside market is 10 to 10.50 You place an open customer order to purchase 75,000 shares at the market price into POSIT, the crossing system that matches buyers and sellers at the mid-point of the NBBO periodically throughout the trading day. You then enter an Instinet order to sell 100 shares of WONC at 10.25. Your Instinet order changes the inside market to 10 to 10.25 and lowers the NBBO midpoint from 10.25 to 10.125 (Alternatively, you move your quotation to 10 to 10.25, with the same result.) Minutes later, POSIT crosses and, voila, your customer's 75,000-share order is executed at 10.125.

Get access to this article and thousands more...

All articles are archived after 7 days. REGISTER NOW for unlimited access to all recently archived articles, as well as thousands of searchable stories. Registered Members also gain access to exclusive industry white paper downloads, web seminars, online technology directory, the iPad App, and conference discounts. Qualified members may also choose to receive our free monthly magazine and any of our e-newsletters covering the latest breaking news, opinions from industry leaders, developing trends and trading strategies.

Already Registered?