HFT King Getco To Make Sure GM IPO Does Not Crash, Will Be Designated Market Maker
The administration is doing everything it can to make sure that the worst IPO in history, that of Government Motors of course, will not be DOA. The latest news is that Getco has been appointed to be a DMM for the year's most important IPO. As Bloomberg reports: "The Chicago-based firm will be tasked with helping trading go smoothly when the auto maker returns to the New York Stock Exchange after a 16-month absence, expected to occur Thursday. NYSE Euronext (NYX) spokesman Christiaan Brakman confirmed that Getco was selected from among the exchange's five designated market makers, who are responsible for buying and selling shares, smoothing trade imbalances and providing liquidity in designated symbols in return for incentives paid by the exchange." Well, by now it should be all too clear what "providing liquidity means."
In other words, expect Getco to internalize and churn any sell interest and make sure that the stock can only go up, up, up, until enough of it is in retail hands at which point it can find its fair value, somewhere in the neighborhood of zero.
h/t London Dude Trader