Thanks.

Wow. I guess MP is busy on another thread... (PS next ime i'm inGreenwich I'd love to play poker).Anyway, the whole concept is called leaning.As a specialist, i get to see the orderbook and no-one else does.So say it is 10 bid for 10,000 and 5,000 offered at 11. I can thenhappily bid 10.01 for 1000. If a market order arrives to sell i get filled(at 10.01). I can then lean on the 10 bid. Meaning i have a ready made stop justbehind me where i can get out for a loss of just a cent. In the meantime I have shown anoffer of 10.99 for 1000 (so i am now the best offer).Not free money because someone could sell at market 10,000 thus eliminatingmy lean, but pretty good odds.Even better if you realize that the specialist is responsible for showingthe prices to the market and sometimes they "get behind"and neglect to represent the best bids or offers. Of course thisis just due to time pressures, not because this will benefit them enormously...

I love when specialists say they get paid to take risk. Risks like that don't deserve the kind of compensation those monopolists on the NYSE and AMEX get.

Is it just because they are monopolists? If so why dont you become a specialist?

But I think these limit order books are currently available for "view". Isn't that what market depth feature is aboutin BBerg!.

drona, first, don't ever think you know better than the NY specialist what's available to 'lean on' for IBM and the other listed stocks, and second, this advantage is greater for these thieves relative to the OTC broker-dealers. Anthis, the price of a seat makes the value of the monopoly zero to *potential new* entrants, but existing 'rents' exist due to their monopoly status (most specialists make money at least 90% of the time, that's not risk taking, that's a protection racket). Supposedly the extra profit going to current specialists is offset by the specialists 'willingness to always make an orderly market', a role unfullfilled by the more anarchic NASDAQ approach. In practice, normalizing for liquidity (avg shares/day), transacting on listed stuff costs you more, and the specialist's caretaking of the market is no different than the mob looking after NASDAQ. Back in the bad old days when NASDAQ didn't quote odd-eighths listed was perhaps better, but now with decimalization, the listed guys are now able to 'penny' big limit orders (see filthy's post below), while NASDAQ's spreads are pretty free of collusion.

What is the term for when everyone can see the limit orders, like in a few option exchanges (U.S.)?

Some exchanges, eg Eurex let people see the order book, so anyone with thatlevel of access (members and ib customers at least) can see the orders and in theory lean on them.the huge advantage the specialist has is that he actually creates the book!he has a certain time (15 seconds?) between receiving an order and posting it.he is in essence a broker who can frontrun his orders. this was specificallybanned by most exchanges. Note that even with this advantage, the specialistonly participates in about 5% of trades, so he really just picks the cherries.of course the NYSE claims their system is more "orderly" because the specialistis there to regulate things. I would love to see evidence to back this up. In myexperience NYSE fills are the worst i have seen. Anyone know of any comparativemarket impact studies?

FilthyThere are some academic papers comparing markets with different features. if you are interested i can provide you with a couple of references.Manthe term is called transparency.EfalkenRecently i read an article in the journal of finance regarding the the variation of specialists seats prices and its relation with the price levels of NYSE.AllI have the impression that the NYSE Specialist has to compete only with the limit order traders in providing liquidity and attracting order flow. He is the only one who has access to limit order book information, thus a monopolistic power. Additionally, he has the option to to step (or post his quotes) back or ahead of the best limit ask or bid or both in order to attract order flow on both or either side of the market.Furthermore i have the impression that order driven systems work more efficient for highly liquid stocks and in normal periods while quote driven systems work more efficiently in illiquid stocks and during crisis periods for all stocksIs that correct?RegardsAnthis