RE: SETS/!algorithm22 Oct 2024 11:06
Not good according to this reviewer:
I am among those who see it as a bad move for some of the quieter stocks. This combined SETS mm system will allow some very sneaky manipulation by mms who will stand well away from, what is meant to look like, a small handful of other players' orders, but may sometimes be orders temporarily posted by mms (or friends of) for a purpose, and pulled as soon as the purpose is fulfilled.
Those quotes will give a false impression of tighter spreads but will be for such tiny and temporary quantities as to be rendered useless and misleading. Those who get taken in will then find themselves quickly stopped out when the (supposed) non-mm quotes evaporate, leaving only the visible mm quotes.
Not such a problem on the busier stocks where such antics are usually swamped by genuine stuff, but things are progressively worse in the lower rankings of the system. The system does set a maximum spread (5 percent on some stocks, and 10 to 15 percent on others), which sounds good, but even 5 percent will be a shock to some punters taken in by the (say 1 percent) spread used as bait - especially for those who took out leveraged positions via spreadbets etc.
As long as the manipulation is not too blatantly obvious, the chances are that a blind eye will be turned, or that sufficient evidence will ever be available to bother doing anything. Skilled players (now muttering "Shush - don't rock the boat!") might be able to join in and exploit the situation, but the innocent punters will be left scratching their heads and peppering the bulletin boards with questions about, "what is going on with (whichever) stock?" Some of the apparent additional trading (which the LSE says will be created), will be punters jumping ship after being hooked."
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