Commentary

Jared Dillian
Traders Magazine Online News

Was it Worth It?

In this piece from 10th Man, author Jared Dillian discusses how the ETF revolution is less about ETFs and more about indexing; about how people have come to view stocks less as stocks and more as blobs of stocks.

Traders Poll

Would you feel better if the Chicago Stock Exchange were purchased by U.S. firm or consortium rather than a foreign one?

Yes

73%

No

4%

Doesn't matter to me

23%

Free Site Registration

May 31, 2003

Specialists May Get a Break

By Staff Reports

Amex options specialists and those at other options exchanges - upset that they continue to pay for order flow even as market makers take some of their orders - may be getting some relief.

The American Stock Exchange Board has approved a rule that would increase the percentage a specialist receives, from 20 percent to 30 percent, in pits with a market maker crowd of seven people, according to Kim Atwater, a spokeswoman for the Amex. The rule is pending SEC approval. The deal, negotiated by specialists at the Amex, is a good one, according to a spokesman for the Options Market Maker Association at Amex.

The Amex has never officially endorsed the common practice of payment for order flow. Nevertheless, the Amex has strict guidelines on how much a specialist can keep from order flow. Usually, the prohibition is no more than 60 percentage whenever a market maker wants to be part of a transaction.

Specialists have complained about these practices for many years. They have contended that the participation of market makers squeezes their profits and puts them at a disadvantage.