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May 31, 2003

Speeding Up On the Amex

By Peter Chapman

American Stock Exchange specialists have begun giving automatic executions against their quotes in Nasdaq securities.

The move is likely to mollify Nasdaq market makers who have complained to regulators about slow fills and locked and crossed markets on the Amex. The decision represents a concession of sorts by Amex specialists. They have traditionally run auctions in which relatively slow executions are the rule.

Specialists will auto-ex against their quotes if they represent the market's best bid or offer.

The maximum order size is 1,000 shares for securities which traded an average of 10 million shares per day in the previous quarter. It is 500 shares for those securities which traded less. No more than a quarter of the Amex's 137 Nasdaq securities trade over 10 million shares per day.

The specialists have a laundry list of situations in which they will not grant automatic executions. The main one is the 10-second rule. Orders that hit their posts within ten seconds of an auto-ex in the same security will not be executed automatically.

In addition, automatic executions will not occur if the spread in the best Amex quote is equal to or greater than 30 cents, or if the size of the incoming order exceeds the size of the quote.

Four specialists handle Nasdaq trades: Bear Hunter, Performance Capital, Susquehanna International and Equitec Specialists.