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Jared Dillian
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The Liquidity Problem

Maudlin Economics Jared Dillian examines stock market liquidity.

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June 30, 2002

More Possible on SuperMontage

By Gregory Bresiger

The STA supports the NASD's proposed rule amendments to change odd-lot participation in Nasdaq's SuperMontage, a change that would be mandatory.

"The STA believe that these proposed rule changes will be beneficial to the marketplace and, in particular, to the public investor," the STA wrote in a letter to the SEC. "The proposed changes benefit the marketplace by removing the possibility, as it exists today in SuperSoes, that a market will have to execute more shares than it, or its customer is willing to trade."

Currently, the SuperMontage rules allow the voluntary participation of market makers in the execution of odd-lot orders by permitting a market maker to set its individual odd lot to exposure limit, if any, on each security.

Under SuperMontage rules, if a market maker sets an exposure limit above zero, executions are affected against its quotes on a rotating basis, reducing its odd lot exposure but not reducing its displayed quote.

But STA argues that NASD's proposed SuperMontage rules are superior because they would allow "market participants to enter orders in any amount from 1 to 999,999 shares."