April 21, 2018
John Guerriero
Proposed rule for large share structure microcap stocks.
As one rule does not fit all. Consider limiting market maker involvement in large share structures. As a share structure grows into the billions limits should be implemented on percentage shorted. Each market maker should not be able to short individually to fill there order books for clients, rather a separate entity (system) could be implemented to facilitate order flow.
Note: wash trades as well as groups can manipulate volume on bid & ask to generate algorithms to fill bids even if new rules are implemented. Artificial large bids will be pulled as algorithms are tricked to fill bids. Same will happen on the ask. Monitor wash trades and canceled orders. Do not allow shorts of 40 - 60% of volume.
View attached twitter files for other alternatives to improve liquidity for microcap market structure.
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