Posted: Fri Oct 21, 2005 1:10 pm
I have always wondered this. For stocks that are (a) thinly traded and (b) managed by a single Specialist or Market Maker (eg. lots of stocks on Toronto), what determines the market price when the floor gets a market order and there are no orders on the other side or in the limit order book? What prevents the Specialist from deciding Market Price is 10% below the last trade that happened a week prior?