Paddy Power Betfair Share Discussion Threads

[max power] 07/3/2002 18:23

I love beaurocrasy, but I cant spell it. lol

[clem] 07/3/2002 18:23

Buy High Sell Low. (i) will suffice.

[clem] 07/3/2002 18:22

M+C.
Explaining how MM's operate and deleting a thread with material I do not wish to be our BB, are not exclusive.

I deleted the thread for the reasons I stated above and am engaged in addressing more general and interesting issues raised about Market Making.

[clem] 07/3/2002 18:14

Go Han. There was a time not so long ago when small stocks were considered not suitable for a public listing. What you describe is a problem caused by lack of scale and is exactly the reason the old USM market was closed. The AIM market was an attempt to try again and offer a funding route for small companies to investor capital.

MM facilitate this and are well rewarded for taking an amount of risk to even out the flow of buyers and sellers.

Before the 'stock market bubble' pricing, illiquidity in AIM was a real problem and it has returned to an extent with the 'crash.'

If small stocks were on a SETS system in this instance, the price would fly to 30p overnight and collapse to nothing soon after. There would be no real bid and offer around at the same time.

One of the 'benefits' of an MM system is this dramatic price volatility is removed because the MM is forced to become a buffer. What the investor loses is a small chance to make a big killing and a big chance of getting left 'holding the bag' at an extraordiately high price.

This actually happened in the 'internet bubble' when there was liquidity and a market with a big 'buy side' majority. We are all nursing our wounds from buying shares in companies that were 20p in July, £50 in October and 20p a year later.

[bimula] 07/3/2002 18:10

Surely this is a simple example of supply and demand. If the mm is so worried about people buying shares in a particular company surely all they need do is whack the price up to a level where people feel ready to sell.

WINS may be the only mm prepared to deal in this stock but surely they should have been able to keep control of the situation without resorting to an official complaint about the very people who want to trade the share!!!!!

A very undignified outcome which nobody comes out of with any credit.

[matto] 07/3/2002 18:08

I wonder how much MMs pay to have access to these BBs?

[alecjm] 07/3/2002 18:07

M+C Blimey, thats twice we have agreed in 12 months, it is getting a bit regular now..!!!!

[go han] 07/3/2002 18:03

Logging off. Catch up with this again tomorrow.

[pinkle] 07/3/2002 17:55

mbk:

One of ADVFNs MMs is Winterflood, the same one as PPB.

[go han] 07/3/2002 17:52

Wonder if PPB management will make a statement. Who knows' but if WINS are so concerned and decided to pull out as MM that would do PPB's credibility untold damage. The action by ADVFN may have already had an adverse impact.

[mbk] 07/3/2002 17:52

Thought thought, when i said earlier today i hope people were taking notes as there may be a test later, didn't quiet expect it to take this form :)

[clem] 07/3/2002 17:50

Go Han. I cant speak for Winterfloods.

But think want might happen when a MM is forced short by a short term surge of buying.

He lets the price run until he's too short for comfort, opens the spread to cool of the short term mania. Market goes quiet. He marks the price down to get his stock back at a price that gives him his profit.

Only a stock with consistant buying with some consistant selling will move smoothly. You can see this liquidity at work if you look at an intraday of VOD.

When a stock is illiquid, the jumps are big and disproportionate. This is why MM's dont like to play and institutions dont get involved. Illiquid shares do not represent a 'perfect' market and the discontinuities are often never ironed out or take a long time to rectify themselves.

[primrose] 07/3/2002 17:48

Yes I'm aware Pinkle-78 has been editted.I'm just drafting a response
now I know that it is Advfn. Cheers
Phil