Make a statement supporting the specialists and you usually draw all kinds of fire. They all must be exhausted by the events of the past couple of days. Where's the cricket .wav file?

by Mark on September 30, 2008 5:47 PM

LOL, Mark. And good to hear from you. Don't worry, those comments will come in sooner or later, no matter what. I don't mind. At least I know I'm being read! Thanks for writing.

Tony -- Thanks. Appreciate your sentiments. We too are really looking forward to approval of the proposed enhancements of our market model.

by Ray Pellecchia on September 30, 2008 7:29 PM

Ray,

Yes I have been busy of late, but finally catching up on my reading. Here we have another gratuitous genuflection to the specialists: Ray, did it dawn on you that Monday's volume for the overall market was nearly double the yearly average? I expect most market participants traded close to 2x their average volume...

As for the close, it's hard to swallow that the specialists did everyone some great favor by buying many stocks down multiple percent. Look at the SPX graph on Monday: the closing print was more than 2% lower than the 3:59:59 price! And a lot of names did not have imbalances, so the ones that did were really ripped lower. Now, I've been around for a while and it doesn't take a rocket scientist to sell some SPX futures at 4pm at 1135 and buy a bunch of names down 2-10% lower (yes look at some of monday's prints! eg AFL, MTB, PNC) and still be able to sleep at night. I'd do that trade every day if I could...

TG

by traderguy on September 30, 2008 8:35 PM

TG -- Your first point doesn't hold water. Specialist trading was up approximately 223 percent that day versus the year-to-date average. That's substantially higher than the volume increase in the market as a whole. We executed 2.0 billion shares on Monday; I'll get the year-to-date average when I get into the office tomorrow, but it's going to be nowhere near the specialist increase. To echo your tone: did it dawn on you to do the math?

I don't understand your second point but will ask around tomorrow. In the meantime, thanks for taking time out of your busy schedule to write.

by Ray Pellecchia on September 30, 2008 11:04 PM

TG -- Completing my response from last night: NYSE trading volume on Monday was 2.0 million shares, compared with the year-to-date average of 1.5 million. So the 223-percent increase in specialist trading on Monday was far in excess of the increased activity of the market as a whole.

I still don't get the other point. Couldn't anybody do the trade you describe? Did you/they? I don't know, and respectfully, I think it's beside the point I was trying to make. What does matter is that we published imbalances to bring as much transparency as possible, specialists reached out to trading desks to try to generate contra/stabilizing interest, and they stepped up with their own capital at the close. On Monday, with the market down almost 800 points at the close and no good news coming out of Washington, who else was doing something that made a positive difference?

I don't see that as a "bragadocious" claim, but just the facts, and I do think that whole process is unique to the NYSE market.

That's all I was trying to say. If that's genuflecting, then I'm proudly on one knee talking about this stuff.

Thanks again for writing.

by Ray Pellecchia on October 1, 2008 4:18 PM

TG, If it was such a lay-up the day the specialists went home long you should have made millions doing the same thing then. With the way the news stories are flying out lately its a VERY risky time for any overnights. S&P's can be up/down 20-30 handles on any givin day. Even intra-day swing trading is alot more intense and risky last couple months.

by tony dey on October 1, 2008 6:33 PM