From: Mike Ianni [mailto:ianni@home.com]
Sent: Thursday, February 01, 2001 6:51 PM
To: Rule-Comments
Subject: Release no. 34-43591 (Firm quote and Trade-Through Disclosure Rules for
Options)


I realize that these rules are now final but I thought I would make a few
comments.
 
Having read the Final Rules, it appears that market makers have to honor their
posted quotes 100% of the time.  Does this mean that they have to honor locked
or crossed markets as well?
 
What happens if I send an order that would trade against another customer order
and that order is handled manually?? Will I be guaranteed a fill?  Currently I
have sent orders like this and I can wait a couple of minutes (while the quote
is still there) and get no fill at all.
 
I found this quote quite interesting:
 
"The Commission believes that the amendments will provide significant and
immediate benefits to investors. In particular, market participants, including
customers and broker-dealers, will be able to rely on quotes up to their
published size in routing orders that are not eligible for execution in the
automatic execution systems."  
 
If the Exchanges want to guarantee their quotes are firm then they should simply
keep their auto execution systems on for most of the time.  I understand that
they should be allowed to turn them off when the market is crossed (not locked) 
and during fast markets but for the remainder of the time their auto executions
will keep them honest.  Otherwise, market makers will continue to abuse orders 
by holding them for inappropriate times.  One of the biggest abuses occurs when 
there is a customer order in the book.  The CBOE, AMEX and PHLX all turn off 
their auto executions when one customer tries to trade against another.  I 
suggest the SEC should take a look at a stock like Juniper (JNPR) where 95% of 
the orders go to these three Exchanges.  If you try to trade against these 
custmer orders then you will be shut out 90% of the time.  The ISE and PSE allow 
"fair" acces to their customer orders.  It's one thing to allow Option Exchanges 
to buy "order flow" but to also allow them to protect/shield the orders from 
competitors is way beyond the realm of a fair marketplace.
 
 
 
Thanks,
 
 
Mike Ianni