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firms directly in their profit and loss statements. Their respective livelihoods were jeopardized by DAET executions at the best available prices in the most competitive markets. The inability of the industry to verbalize its hatred of DAET/SOES arose because it couldn't tell the truth to the public. While the truth can usually "set you free," in the case of market makers the truth about Nasdaq trading was supposed to be cloaked. |
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I had a momentous meeting with John L. Watson III at the STA's convention in the fall of 1995 at a cocktail party in Boca Raton, Florida, hosted by Herzog Heine Geduld. It is parenthetically interesting to note that these industry conventions are never held in Jersey City or Bayonne. So then he met me, because I am easy to criticize, easy to deplore, but impossible to avoid. There I was, eating jumbo shrimp as large as Labrador retriever ears. I greeted John L. Watson III with a hearty, "Hi John, how are you." |
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He showered me with his politician's smile. First and foremost, he was a politician. (Nikita Khrushchev used to say that politicians are the same all over: They promise to build a bridge even where there is no river.) Then he recognized who I was. The original SOES bandit. |
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We then had a pleasant chat about SOES. My first question was, "What's the problem with SOES?" |
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His immediate response was that market makers get hit multiple times because of SOES. I explained to him that this was just not possible, and thus not true, because at that time a 15-second delay had been built into SOES between executions. Actually, it was a 20-second delay, but no one knew of the extra 5 seconds that the NASD had stolen for the market makers. |
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I didn't really want to hurt his feelings, but someone had to tell him. Watson could not verbalize one logical reason why he was against DAET/SOES. He was so caught up in the industry rhetoric that it appeared as though he had never personally thought through the issue for himself. |
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I proceeded to give him some of the real facts concerning trading in the trenchesa short rendition of the world of DAET/SOES according to Houtkin. Within a few months after this conversation, John L. Watson III tendered his resignation |
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