Broker outsource to a firm that are clearing member = POSSIBLE DANGER ?

N

NasiWarrior

My Broker is a clearing member of CME but uses a separate firm for ICE /ICE Europe.

I won't name them as the situation is typical amongst many brokers.

Possible danger is that, this clearing member on ICE that's taking in the trades might also be one of the Lead Market Makers. If so, the clearing member / market maker would have an informational advantage about retail stop placement, correct?

Like this: "our client wants to buy here with sell stop is here; do you want to take the other side?"

There's no regulation stopping this happening, is there ?

-Nasi-
 
Quote from NasiWarrior:

My Broker is a clearing member of CME but uses a separate firm for ICE /ICE Europe.

I won't name them as the situation is typical amongst many brokers.

Possible danger is that, this clearing member on ICE that's taking in the trades might also be one of the Lead Market Makers. If so, the clearing member / market maker would have an informational advantage about retail stop placement, correct?

Like this: "our client wants to buy here with sell stop is here; do you want to take the other side?"

There's no regulation stopping this happening, is there ?

-Nasi-
More...

Wrong, to my knowlege. He has to forawrd it to the exchange, the exchange clears.

Matching is illegal if he charges you exchange fees - he can not invoice you a third party fee that never happened.

Also YOUR Orders are not going to be relevant anyway - he gets hundreds of orders. Unless he can change causality (jump ahead of your order) - which was / is only possible in US stocks (due to stupid exchanges) - no.
 
Quote from NetTecture:

Wrong, to my knowlege. He has to forawrd it to the exchange, the exchange clears.

Matching is illegal if he charges you exchange fees - he can not invoice you a third party fee that never happened.
More...
.

Off-exchange trading is not the topic at hand. Your points would be relevant if it was- but it's not..

The whole point of the thread is to highlight a situation that can arise where a market participant knows the layout of stop loss orders... and in particular; when that participant might be on the other-side of your trade*.

*yes, the exchange is counter-party to all contracts, but normally we trade with each other.

-Nasi-
 
having your order stop and not having your order stop will not make that much difference. if mm decide to move market to x, will do it with or without info about your order.

in unlikely(?) event that info about your intention changes the mm plan, to go after you instead the other way, that's where you will lose.

probably unlikely, except low liq markets, but I scramble my stops. have number of strategies that are equivalent and only I know which one will use in next trade. so no one can guess where my stops are right now.
 
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