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Subject: Tying Markets to Make Trading Fairer

Date:    05/08/2000 1:51 PM
     
     
I am responding to the article in the May 8, 2000 Wall Street Journal page 
C21 "SEC Clears NYSE to Let Firms Trade Big Board Stocks on Competing 
Markets", in which it says
     
 >  The SEC asked for comments--due May 12--on six options for tying 
 >  markets together in ways that might make trading fairer.
     
An example of the problem of fragmentation is the situation which 
defrauded me of proper execution of a trade I placed Friday morning at 
10:13am EST with my brokers.  The stock was listed since April 1979 on the 
New York Stock Exchange and so had not been subject to Rule 390 anyway.
At the time I placed my order for 700 MFL at the limit price of 10-5/8, 
the stock was shown on my QuoTrek as bid 124 at 10-9/16 asked 63 at 
10-11/16.  At 10:37am EST my QuoTrek reported a trade of 2@10-5/8T, which 
my broker reported to me at 10:44am EST as being a 200 share partial fill 
of my order.
    Instead of the ordinary and necessary time/price priority system
which existed before NASD swindles began to be encouraged in the name of 
"competition", the grotesque fragmentation of the market resulted in the 
rest of my order (500 MFL) being totally ignored for the entire rest of 
the day (more than five hours) while many other trades were executed at 
my price on behalf of buttinskys whose LATER-ARRIVING orders were sent 
either to the NYSE floor or to other "markets" where executions were 
completed to so-called "market makers" or later-arriving others.  Though 
there was ample stock sold at my price in that following five-plus hours, 
the rest of my order ended the day sitting unexecuted and forlorn with 
the "third market" trader who had been given the order under "payment for 
order flow" practices.
    This result of so-called "competition" is nothing but fraud.  My order
was in the market long before any of those later-executed bids were 
executed.  That my order went unfilled is a demonstration of the *intent* 
of those who have been demanding the ability to fragment the market so as 
to trade in an unfair and disorderly manner.  Only a central order book or 
other means of assuring time and price priority has any possibility of 
producing a fair and orderly market.  The emphasis which I have heard from 
some SEC personnel, implying that public traders are so stupid as
to always enter orders "at the market" and that there is no other kind of 
public trader about whom the SEC, in its rule making capacity, need be 
concerned about is absolute nonsense.
    I am a member of the public, never affiliated with any broker-dealer,
who has been trading stocks now for more than 38 years for my own accounts, 
nearly always in NYSE listed issues because of the frauds, deceptions, and 
manipulations which characterize "trading" in the NASD-controlled markets. 
As noted in a previous complaint to the Denver regional office, the NASD 
continues to be such an anarchistic swindle system that one order I placed 
there recently was not even allowed to be displayed on the system while 
thousands of shares were sold to members of the public by displayed dealers 
at prices above my limit price.  I ask that the SEC resolve the current 
matter *not* in favor of the frauds who fragment and destroy fair and 
orderly trading with their buttinsky noncompetitive and untimely 
"competition" but instead in favor of some means of assuring time and
price priority for public limit orders, at least for exchange-listed 
securities even if fair and orderly remains politically impossible in the 
fundamentally fraudulent NASD dealer markets.
    Thank you for your attention to my comments on this important issue
to the viability of the public securities markets.  If there are any 
questions about the views expressed, I can be reached via any of the means 
of contact shown in my sig lines.
    Bob Grumbine
 
Robert E. "Bob"   #   postal  PO Box 260203, Lakewood CO 80226-0203 
Grumbine, MBA