A Barron's article included mention of Jim Maguire, NYSE's former specialist for BRK (now
associated with Barclays Capital), who has been campaigning for years to have stocks trade in 5-cent increments, which he seerts could "...bring greater liquidity and order to the process..." Barron's covered previously Maguire in a 2005 article "Meet Mr. Nickel," April 25, 2005), when he commented on what he saw as shortcomings to the exchange's change to penny increments in 2001.
http://online.barrons.com/article/SB111421958890914976.html
Some excerpts from that 2005 article:
"Over the past four years, however, nearly everyone intimately involved with trading has become frustrated by the penny regime. While the apparent bid-ask spreads have narrowed, the amount of stock available at the quoted market prices has shriveled to insignificant levels.
"Because displaying a bid or offer is an invitation for another trader to step in front of the order for the price of a mere penny per share and get a trade off first, limit orders have become scarce.
"At the time decimalization was being implemented, its advocates asserted that it would spur a surge in volume that would more than offset any per-trade reduction in trading revenue for brokers and market makers.....overall volume has stagnated, a situation surely exacerbated by the bear market and recent range-bound indexes....
"Virtually the only folks satisfied with the penny arrangement are programmers of so-called black boxes, statistically oriented trading systems... This type of activity....has risen to an average of 50% of exchange volume from 22% in late 2000.
"The idea behind Maguire's push is that setting somewhat wider price increments will give investors and speculators places to congregate with indications of buying and selling interest, making for more transparent, deeper and more liquid markets. As it now stands, a look at the bids and offers provides only a hint at the true supply and demand for a stock."
associated with Barclays Capital), who has been campaigning for years to have stocks trade in 5-cent increments, which he seerts could "...bring greater liquidity and order to the process..." Barron's covered previously Maguire in a 2005 article "Meet Mr. Nickel," April 25, 2005), when he commented on what he saw as shortcomings to the exchange's change to penny increments in 2001.
http://online.barrons.com/article/SB111421958890914976.html
Some excerpts from that 2005 article:
"Over the past four years, however, nearly everyone intimately involved with trading has become frustrated by the penny regime. While the apparent bid-ask spreads have narrowed, the amount of stock available at the quoted market prices has shriveled to insignificant levels.
"Because displaying a bid or offer is an invitation for another trader to step in front of the order for the price of a mere penny per share and get a trade off first, limit orders have become scarce.
"At the time decimalization was being implemented, its advocates asserted that it would spur a surge in volume that would more than offset any per-trade reduction in trading revenue for brokers and market makers.....overall volume has stagnated, a situation surely exacerbated by the bear market and recent range-bound indexes....
"Virtually the only folks satisfied with the penny arrangement are programmers of so-called black boxes, statistically oriented trading systems... This type of activity....has risen to an average of 50% of exchange volume from 22% in late 2000.
"The idea behind Maguire's push is that setting somewhat wider price increments will give investors and speculators places to congregate with indications of buying and selling interest, making for more transparent, deeper and more liquid markets. As it now stands, a look at the bids and offers provides only a hint at the true supply and demand for a stock."
