The initiation and withdrawal of odd-eighth quotes among Nasdaq stocks

Article Abstract:

A 1994 report on the deliberate avoidance by Nasdaq market makers of odd-eight quotes in large, actively-traded stocks prompted both academic debate and investigations of Nasdaq by the SEC and the Dept of Justice. These investigations led to the launch of litigation and the government's eventual acceptance of a billion-dollar settlement from 33 market-makers on the Nasdaq market. The results of a new study that extends the scope of the 1994 report shows that Nasdaq market makers in the 1990-1994 period also initiated or withdrew odd-eight quotes in a manner that maximized spreads.

Securities Dealers, Investment Banking and Securities Dealing, Securities and Commodity Exchanges, Security and commodity exchanges, Securities Exchanges, Regulation, Licensing, and Inspection of Miscellaneous Commercial Sectors, Securities & Commodities Regulatn, Security brokers and dealers, Methods, Prices and rates, Investigations, Portfolio management, Exchanges, United States. Department of Justice, Securities industry, Securities listing, Stock prices, United States. Securities and Exchange Commission

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The trading profits of SOES bandits

Article Abstract:

Small Order Execution System (SOES) investors have drawn the interest of a number of financial market players due to the impact they generate on liquidity and trading costs. These investors, customarily called bandits, carry out transactions through the Nasdaq Market System, where they look for potential posted quotes. It was shown that bandits tend to earn more by conducting transactions before market-makers update their quotes. It was further revealed that bandits tend to lose money when closing trades with market makers without employing the use of SelectNet and Instinet.

Other Financial Vehicles, Security & commodity services, not elsewhere classified, Stock Quotation Services, Usage, Evaluation, Over-the-counter markets, Over the counter markets

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Did Nasdaq market makers implicitly collude?

Article Abstract:

A study indicates that brokerage firm market makers in the National Ass'n of Security Dealers Automated Quotation, or Nasdaq, stocks indirectly kept their profits supracompetitive. The findings led to filings of many class-action lawsuits. Essential ideas at issue and in the study included alternative market structures, spread patterns, tacit collusion and market impact. Analysis of daily spreads for stocks showed the cooperation.

Price fixing, Market makers (Securities trading)

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