Simon - question on using STX to lazily trade indices

[Spoegs]

If memory serves me right Thursday last week STX FINI had a crazy last minute trade that was 10% down on the NAV. Next morning there were 3 or 4 trades between the crazy closing and when STXFINI got back to close to NAV. I've seen similar with STX40 - crazy last of day trades that are way off the NAV. How are you preventing stoplosses from triggering on these crazy trades?

[SimonPB]

I don't place auto stop loss on the system .. I manage them manually for just that reason ..

[Spoegs]

I phoned STX and asked them what had gone down and they didn't have an answer, but in my opinion you can't have a credible trading instrument that can potentially be manipulated like that. I suppose their thinking is that the majority of their investors are in it for the long haul and daily blips like that aren't an issue. Just to clarify - what is the market maker's mandate? I thought the market maker was there to ensure that it traded close to NAV. Maybe I've got it wrong. I suppose the lesson is don't rely too heavily on automatic stops.

[SimonPB]

they pull bid/offer during the auction .. somebody put in an @market sale and took out the buyer well below FV .. the seller could ahve requested a reeversal, no idea if they did ..

[DST]

See

http://www.tickertalk.co.za/group_discussion_view.php?group_id=197&grouptopic_id=312

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