Thursday, December 4, 2008

Why the end of day selling?

More end of day selling happened today.


Maria Bartiromo and Dylan Ratigan again were asking that question on CNBC.

End of day distributions by hedge-funds was one explanation. The new rule that specialists have started to use in the last month to sell in the last thirty minutes was another explanation.

NEW YORK, Oct 24 (Reuters) - The New York Stock Exchange said on Friday it will implement rules next week that will stop trading floor specialists from seeing orders before the public.

Whatever the explanation, the result remains that the stock market day is ending down again.

The specialists -- who will now be called Designated Market Makers (DMMs) -- traditionally use their advanced look at orders to find an appropriate trading partner, thereby calming volatile markets.

In a statement, NYSE said the DMMs still must maintain the orderly trading of stocks 'in periods of significant imbalances.'

SEC will also test a program that rewards market makers who take the other side of incoming orders, providing liquidity in volatile markets.

Not sure if the article above clarifies or makes the issue more complex.

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