Market Makers and Uplisting based on recent comments from the YHOO board. I'm posting here since YHOO keeps deleting it.
This is a micro-cap stock that is thinly traded. This means the beta will be much higher than a blue-chip stock.
Part of the environment is that while we trade on the OTC, individual Market Makers do their job to "create a market".
They do this by executing trades on behalf of their clients and move the price up/down to create volume (e.g. a market).
Keep in mind, as a MM, they have to honor their BID/ASK. They offer these shares in blocks.
So if you see NITE on the BID at $0.40 and also on the ASK at $0.42, that means they are willing to buy up to the blocks of shares they are offering on the bid, and sell shares up to the block they are offering to you for the ASK.
Sometimes they may have a very large BID/ASK, but mask it in smaller block sizes.
Sometimes MM's will route orders through other ECN's. Investment firms do this to mask their trading strategy.
If they or their clients don't want to buy shares, they drop the BID.
If they or their clients want to unload shares, they drop the ASK.
If they or their clients want to buy shares, they will raise the BID.
If they or their clients want sell shares at a higher price, they raise the ASK.
The various MM's compete to get their BID/ASK as the best bid and best ASK.
You may see NITE buying shares at $0.40, but be at $0.45 on the ASK, with CDEL at $0.499 on the ASK. That means NITE is buying shares from sellers, and CDEL is selling shares to buyers.
Sometimes MM's will flash a big block size to show they are willing to go in one direction or another. Sometimes it shows up in the trades, but most times it just flashes on L2, and another MM adjusts their BID/ASK.
I don't have a L2 subscription, so I can't see the *depth* behind the BID/ASK for each iteration of each firm. I only see the free view which shows their best BID/ASK for each firm.
Do MM's buy long? Do they sell short? Yes and yes. They do this to fill orders. That is how they move the pps up or down. This is amplified when retail customers come in to buy or sell. Most of the time the volume is coming from the customers behind the MM's.
Is the stock being targeted by short sellers? No, consider the number of shares sold short vs the number of shares outstanding.
The goal is to up-list.
Once a company does manage to prove itself and satisfy up-listing requirements, the benefits are both impactful and immediate. The biggest benefit is increased visibility. Whereas a lower listing confined a company to simple over the counter exchanges between individuals, a bigger listing gives a company access to the larger institutional investors. These institutional investors can start to accumulate positions adding more credibility and liquidity, as well as, potentially, share appreciation.
Newly up-listed companies also benefit from higher trading volumes (greater liquidity). Studies from large exchanges, such as the NASDAQ, confirm that, after up-listing, companies tend to see 3-month average daily volume increase of a 132%.
In the early periods after up-listing, a company usually gets intense coverage from top analysts, thereby making the company's stock more attractive to investors. In the end, up-listing is one of the many tools a company can utilize to help create long-term shareholder value for a company with a solid management business plan.
AI
