Market makers, stub quotes and new SEC rules
In the case of the May 6th Flash Crash the problem was not primarily due to the market makers but was due to a really large leveraged order coming through at one time.
To use your analogy, it would be similar to a big tubby swimmer doing a canonball from the high board causing all the water in the pool to splash out fast than the market makers could fill the pool.
The tubby swimmer in this case was Waddell & Reed, a money manager that was trying to protect their sizable stock portfolio from dropping (a very valid and legitimate operation).
The remedy would be to require the tubby swimmer to learn how to use the pool with others (i.e regulation) and have the owners make improvements in the pool setup (i.e market reform)
Thank you so much for exposing some of the scumbags of the financial world and how they operate.
Excellent! Iâ€™m your number 1 fan in veracruz, mÃ©xico! thanks for your contrbution
Could an investor see the stub quote down there at 1 cent (why doesn't the keyboard have a cent sign?) and sell the stock short?
for some reason the full screen option does not work on the videos..
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