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End of storyExcept for the moral that oral and hastily written orders can easily be misinterpreted whereas computerized records are more idiot-proof. |
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The Industry's Trading ''Conventions" |
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The trading system I have described to you had been in place so long that young people who came into the business assumed that these policies were accepted trade courtesies that were not only normal but required. Everyone wanted to believe that practices flowing from these actions were legitimate. Accordingly, concepts like payment for order flow became routine. Exchanging information with each other about orders that the market makers had in hand surfaced as the etiquette of the industry. Traders at the major market-maker houses would routinely espouse to me the "trading etiquette." For example, certain stocks only traded in quarter points and never in eighthsclearly price fixingdemonstrating that market makers had no real understanding of the impropriety they were committing. For the market makers this was business as usual. Corrupt practices had become the concrete binding the structure of the Nasdaq market. |
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The market makers also were all too willing to blame SOES traders for all negative fallout arising from the ills of the market. According to the market makers, the SOES bandits were responsible for all the problems of Nasdaq and were committing actions equivalent in their minds to destroying the integrity of the market and widening spreads The industry declared open hunting season on SOES traders, who were put on the industry's equivalent of President Nixon's official enemies list. |
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The market makers packed the important committees and boards of the NASD with people active in or sympathetic to the market makers' interests. For example, even the SEC found that though late trade reporting was common, the NASD maintained surprisingly few records and actively |
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