If you'd been using your approach a year ago, the list of A-rated funds for the preceding year—indeed, even for the preceding five years—would be loaded with funds invested in what the bizbabble channels call "the tech-heavy NASDAQ" (it's gotten to sound sort of like Homer's "wine-dark sea" and "rosy-fingered dawn" to me).

In their original article, Messrs Christie and Schultz found that in 70 of the 100 most heavily traded stocks, Nasdaq dealers avoided quoting prices in odd eighths of a dollar. Buyers were far more likely to quote shares at 28 1/2 or 28 3/4 than at 28 5/8.

soes is a system that allows small orders placed through it to be automatically executed against Nasdaq market makers at the best bid or ask prices displayed on the Nasdaq system. soes trading has generally represented less than 10 percent of total Nasdaq shares traded. soes can be used by nasd member firms that register as participating soes order entry firms.

Through the boom and bust, when Wave's stock sold for $50 a share and when it sold for less than a buck, when the company was delisted from the Nasdaq in 1997 and then reinstated in 1999, the Wavoids have been predicting that Wave will be bigger than Intel, AOL, or Yahoo -- and searching for clues that Wave's software is about to become the gold standard of trusted computing, an indispensable part of the 150 million PCs shipped yearly.

The pocket of predictive structure in the fluctuations of share prices that the human and automated SOES bandits seem to have exploited successfully was created by the sociotechnical organization of Nasdaq. As noted, only an authorized NASD member firm that had registered as a market-maker in the stock in question could post bids and offers on Nasdaq’s screens.

One of the major differences between the Nasdaq exchange and the NYSE is Nasdaq’s structure of competing market makers. On the NYSE, a stock is assigned one DMM as its market maker. On Nasdaq, each market maker, referred to as a dealer, competes for customer order flow by displaying buy and sell quotations for a guaranteed number of shares.

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