Today on Fidelity I placed a market, on-the-open order for MDY, a S&P400 ETF. Although the opening price of MDY is listed as 141.85, fidelity gave me 141.89. I contacted customer service about this discrepancy and here's what they told me:
(This is an abridged version where I mostly cut out the excessive pleasantries the overly polite fidelity reps always give.)
CS Rep: We have confirmed the printed open price report from the Third or "Institutional" market. That is where large entities trade stocks, for example pension funds or 401k's. I am still going to wait, if you have time to confirm the consolidated price report and open on the primary exchange. Also, keep in mind as the buyer on this trade you receive the Ask/Offer price that is highter; the Seller's or Bid price on a quote is lower (in general terms). For example, $9.98 by $10 ask bid/ask examples.
CS Rep: Here is what we have.
CS Rep: Individual investor with market orders at the open received $141.89.
CS Rep: The broker to broker, third market transactions filled at $141.85; individual investors are not eligible for those prices. Those can involve large block trades in the thousands of shares too.
~Then I point out that I can get the opening cross on my other brokerage account that's not with fidelity; although, to be fair, it is a direct access broker, so perhaps that's the key difference. Either way though, I thought this was exactly what "on the open" was supposed to guarantee: getting the listed opening price
CS Rep: An on-the-open market order fills at the next available price its primary, listed exchange at 9:30:00 a.m. Eastern. In that example, it's a given that the stock or ETF shares open at 9:30:00 a.m. Eastern too.
CS Rep: You can also use a limit order with "on the open" in the future. However, that puts the order second in the execution hierarch, market orders fill first. Please keep in mind, there is greater volatility "at the open" and "at the close" for prices.
~I didn't really get the first point the CS rep tried to make and the second is obviously not what I'm trying to do
CS Rep: We reconfirmed that your received the opening price of $141.89 for MDY on its primary exchange, NYSE ARCA.
CS Rep: Please keep in mind, market orders entered before the open are due the opening price on the primary exchange.
My conclusion from this: To get the flat rate per trade fee that fidelity has they use some other non-standard markets which prevent you from being guaranteed the opening cross price when you have an "on the open" order. This seems stupid to me because it cost me 0.04/share, which is FAR more than I'd pay using a direct access broker. What's the point of having a flat trading fee if you get a few cents worse per share in the process????
What does everyone think? Is Fidelity full of crap or am I unreasonable to expect to be able to get the opening cross price?
(This is an abridged version where I mostly cut out the excessive pleasantries the overly polite fidelity reps always give.)
CS Rep: We have confirmed the printed open price report from the Third or "Institutional" market. That is where large entities trade stocks, for example pension funds or 401k's. I am still going to wait, if you have time to confirm the consolidated price report and open on the primary exchange. Also, keep in mind as the buyer on this trade you receive the Ask/Offer price that is highter; the Seller's or Bid price on a quote is lower (in general terms). For example, $9.98 by $10 ask bid/ask examples.
CS Rep: Here is what we have.
CS Rep: Individual investor with market orders at the open received $141.89.
CS Rep: The broker to broker, third market transactions filled at $141.85; individual investors are not eligible for those prices. Those can involve large block trades in the thousands of shares too.
~Then I point out that I can get the opening cross on my other brokerage account that's not with fidelity; although, to be fair, it is a direct access broker, so perhaps that's the key difference. Either way though, I thought this was exactly what "on the open" was supposed to guarantee: getting the listed opening price
CS Rep: An on-the-open market order fills at the next available price its primary, listed exchange at 9:30:00 a.m. Eastern. In that example, it's a given that the stock or ETF shares open at 9:30:00 a.m. Eastern too.
CS Rep: You can also use a limit order with "on the open" in the future. However, that puts the order second in the execution hierarch, market orders fill first. Please keep in mind, there is greater volatility "at the open" and "at the close" for prices.
~I didn't really get the first point the CS rep tried to make and the second is obviously not what I'm trying to do
CS Rep: We reconfirmed that your received the opening price of $141.89 for MDY on its primary exchange, NYSE ARCA.
CS Rep: Please keep in mind, market orders entered before the open are due the opening price on the primary exchange.
My conclusion from this: To get the flat rate per trade fee that fidelity has they use some other non-standard markets which prevent you from being guaranteed the opening cross price when you have an "on the open" order. This seems stupid to me because it cost me 0.04/share, which is FAR more than I'd pay using a direct access broker. What's the point of having a flat trading fee if you get a few cents worse per share in the process????
What does everyone think? Is Fidelity full of crap or am I unreasonable to expect to be able to get the opening cross price?
