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BOX - Boston Options Exchange
- Thread starter def
- Start date
Quote from mskl:
And did you realize that if the best bid ($1.50) was on another market (ISE) then an invisible PIP can still take place on the BOX. There is no incentive to post your best market at the BOX.
So what happens - the ISE will lose order flow for sure. Currently, the "best" price generally attracts the order flow - with invisible PIP's, LESS order flow will arrive at the ISE. So, in order to get that volume back, expect other Exchanges to come up with similar PIP rules. And in each case, there is less of an incentive to show your best market (if the PIP is invisible to outside participants).
Wider spreads will result.
It is late and I don't get that at all ..
Quote from GATrader:
Tony I don't think it works that way. I think if market is 1.50 bid 1.55 offer, and you put in an order to buy 1.55, everyone mkt maker including your broker can "penny" the offer for 3 seconds and sell it to you at 1.52.
If I hit the offer and get price improvement... that is dandy..
Quote from GATrader:
the loser is the guy who was offering at 1.55 coz they got pennied. Is it fair, I don't see why not.
It is only fair if he has the option to do the same thing...
Quote from GATrader:
They can only penny you during the PIP period, and only by your broker and the MM assigned to that option class. Hey getting pennied it not bad if they only have 3 seconds to do it, Try the phlx, 2 minutes of "free look"
When or what is the PIP period?
So my broker or the MM can step right in front of me and my offer at 1.55 and sell it to the 1.55 bidder at 1.54, (good for the bidder, bad for me) BUT... if I want to step down, I have to drop all the way to 1.50. I think NOT FAIR.
I have wondered why I can have a bid sitting at the bid price all day and not get hit until the offer price comes right down to my bid.
Anyway, thanks to most of you for helping me understand all this.
Tony I agree w/ you about your pt on the PIP. It is a double edge sword. It is good for the customer price taker due to the entire mkt vying to trade against you at a better price than NBBO BUT bad for the customer price maker.If you want to be a price maker as a customer, I am sure you still could have a better degree of success at the BOX vis-a-vis other exchanges where it is illegal. Keep also in mind that there are thousands of strikes and all participants can only PIP for 3 seconds. Take that PHLX... !!