How are Limit Orders Handled at the Open?

Unless your broker enters your order manually (doubtful) it's all done automatically and really depends on what sort of algorithm they're using. Most likely some piece of code that legally benefits them & their clearing agent at your expense.

I'm pretty sure if you had entered the same order on IB's TWS platform it would've executed on the open at 10.27.

Lean on the broker at tell them they at least should NOT charge you a commission and/or owe you some money.

Good Luck!
 
You are owed the opening print, $10.27, plain and simple. You had a marketable order on the specialist's book and are entitled to a print. If it opened at your limit, that is a different story, but it opened higher.

Call your broker's compliance department with ALL of the details you gave us, and ask for a price adjustment.

It is not the dollar amount, it is the fact that they may do this on thousands of trades.

Please keep us updated.

surdo
 
The order was to
Sell 400 PCK at a limit of $10.00 GTC
I'm not certain that the broker did anything wrong, you have to look at the details. The broker had received the order weeks ago. Where did the broker send the order, the NYSE?, or somewhere else? The NYSE is the primary exchange for PCK. I don't think a stock is officially open until the primary exchange opens it. The NYSE delays stock openings all the time. That's one of the advantages that the NYSE Designated Market Makers have. They can delay the opening and sell stock somewhere else and then buy it back lower when they finally open the stock on the NYSE. In this case, I suspect that the broker had sent the order to the NYSE, the NYSE Designated Market Maker decided to delay the opening until 09:41:39. Between the first print at 09:30:44 and 09:40:38 may or may not have been selling stock elsewhere at prices between $10.10 and $10.41. Then the Designated Market Maker bought stock from his book at $10.00. In short the Designated Market Maker can screw you on the open. Below are time and sales prints from Sep 8th, 2010 in PCK. Exchange Code Abbreviations (A=American, N=NYSE, P=Pacific, TH=Third Market, Z=?,) Anybody know which exchange Z stands for?

Time, Last Price, Last Size, Last Exch, Bid Price, Bid Size, Bid Exch, Ask Price, Ask Size, Ask Exch. (Bid and Ask are the Bid and Ask AFTER the Last trade)

09:42:30 10.03 764 N 9.96 24 TH 10.30 2 N
09:41:49 10.00 400 P 9.96 24 TH 10.03 10 N
09:41:49 10.00 779 P 9.96 24 TH 10.00 11 P
09:41:39 10.00 1000 N 10.00 5 P 10.00 11 N
09:41:39 10.00 221 P 10.00 5 P 10.00 11 N
09:41:39 10.00 279 P 10.00 5 P 10.00 11 N
09:40:38 10.00 300 Z 9.93 1 P 10.00 3 Z
09:39:59 10.11 300 P 10.11 4 P 10.12 5 TH
09:39:35 10.10 300 P 10.10 3 P 10.12 5 TH
09:39:27 10.12 200 P 10.11 2 P 10.12 5 TH
09:31:32 10.41 100 TH 9.90 5 A 10.43 3 TH
09:31:32 10.41 100 TH 9.90 5 A 10.43 3 TH
09:31:32 10.41 100 TH 9.90 5 A 10.43 3 TH
09:31:32 10.41 100 TH 9.90 5 A 10.43 3 TH
09:31:32 10.41 100 TH 9.90 5 A 10.43 3 TH
09:31:16 10.30 100 TH 9.90 5 A 10.31 1 TH
09:31:16 10.27 100 TH 9.90 5 A 10.30 1 TH
09:31:00 10.27 200 TH 9.90 5 A 10.30 1 TH
09:31:00 10.27 100 TH 9.90 5 A 10.30 1 TH
09:30:44 10.27 718 P 9.90 5 A 10.27 1 TH
09:30:44 10.27 100 Z 9.90 5 A 10.27 1 TH

Anybody else have a different interpretation or opinion on what may have happened in this case?
 
This forum is really a terrific resource and I appreciate everyone's continued help.

I attached the response from my brokerage below.

I think they are stating that the primary exchange for PCK is the NYSE and that it did not open for normal trading until 9:41 am, at which time the price on PCK was $10.00.

My temptation is to let this go as I don't believe they profited from any difference in price. The brokerage does provide me with quite a few commission free trades each year and in fact I have paid almost no commissions over the last several years with the limited trading that I do.

Perhaps one lesson here is that my trade was on the day before the Ex-Dividend day and that may bring out additional buyers and drive up the price. Maybe one should not go into those days with a limit order, and instead see if the security trades higher during the day. It looks to me as though some buyers placed market orders or somehow paid more than they should have. PCK is currently trading at $9.90.

KAWill70

- - -

Not all securities begin trading at 9:30 a.m., Eastern time. For most exchange-listed securities, we will only execute orders once the security's listing exchange opens for trading. While the exchanges' normal business hours for trading equities begin at 9:30 a.m., Eastern time, some securities may not open until after 9:30 a.m. In addition, for a select group of securities, regular trading sessions begin prior to 9:30 a.m. Trades executed before the listing exchange opens for the security are considered "pre-market" trades. Please be aware that we do not participate in pre-market trading.

The price of $10.27 for Pimco California Municipal Income Fund II (PCK) was not the opening price on the security's primary exchange and is therefore considered a pre-market trade. This security is listed on the New York Stock exchange and began trading at 9:41 a.m., Eastern time at $10.00.

- - -
 
Just wanted to acknowledge your reply as you were absolutely correct on the NYSE opening late and being the primary exchange. I had no idea that markets worked like that especially for the more thinly traded stocks.

I've been reviewing the trades starting at 9:30 am trying to understand exactly what happened.

It looks as though several traders entered sell orders with high Ask prices at the open, perhaps trying to benefit from the ex-dividend day being the next trading day. However, I see no Bids over $10.00 so I'm guessing that all initial trades were the result of orders executed as Market Orders (rather than Limit Orders) and through the secondary exchanges.

Those buyers undoubtedly regret not using Limit Orders. I don't understand how multiple exchanges interact in a situation like this and whether some of them sell from their own inventory. No wonder the Primary exchange may have to delay the open.

Quote from VoodooMMI:

The order was to
Sell 400 PCK at a limit of $10.00 GTC
I'm not certain that the broker did anything wrong, you have to look at the details. The broker had received the order weeks ago. Where did the broker send the order, the NYSE?, or somewhere else? The NYSE is the primary exchange for PCK. I don't think a stock is officially open until the primary exchange opens it. The NYSE delays stock openings all the time. That's one of the advantages that the NYSE Designated Market Makers have. They can delay the opening and sell stock somewhere else and then buy it back lower when they finally open the stock on the NYSE. In this case, I suspect that the broker had sent the order to the NYSE, the NYSE Designated Market Maker decided to delay the opening until 09:41:39. Between the first print at 09:30:44 and 09:40:38 may or may not have been selling stock elsewhere at prices between $10.10 and $10.41. Then the Designated Market Maker bought stock from his book at $10.00. In short the Designated Market Maker can screw you on the open. Below are time and sales prints from Sep 8th, 2010 in PCK. Exchange Code Abbreviations (A=American, N=NYSE, P=Pacific, TH=Third Market, Z=?,) Anybody know which exchange Z stands for?

Time, Last Price, Last Size, Last Exch, Bid Price, Bid Size, Bid Exch, Ask Price, Ask Size, Ask Exch. (Bid and Ask are the Bid and Ask AFTER the Last trade)

09:42:30 10.03 764 N 9.96 24 TH 10.30 2 N
09:41:49 10.00 400 P 9.96 24 TH 10.03 10 N
09:41:49 10.00 779 P 9.96 24 TH 10.00 11 P
09:41:39 10.00 1000 N 10.00 5 P 10.00 11 N
09:41:39 10.00 221 P 10.00 5 P 10.00 11 N
09:41:39 10.00 279 P 10.00 5 P 10.00 11 N
09:40:38 10.00 300 Z 9.93 1 P 10.00 3 Z
09:39:59 10.11 300 P 10.11 4 P 10.12 5 TH
09:39:35 10.10 300 P 10.10 3 P 10.12 5 TH
09:39:27 10.12 200 P 10.11 2 P 10.12 5 TH
09:31:32 10.41 100 TH 9.90 5 A 10.43 3 TH
09:31:32 10.41 100 TH 9.90 5 A 10.43 3 TH
09:31:32 10.41 100 TH 9.90 5 A 10.43 3 TH
09:31:32 10.41 100 TH 9.90 5 A 10.43 3 TH
09:31:32 10.41 100 TH 9.90 5 A 10.43 3 TH
09:31:16 10.30 100 TH 9.90 5 A 10.31 1 TH
09:31:16 10.27 100 TH 9.90 5 A 10.30 1 TH
09:31:00 10.27 200 TH 9.90 5 A 10.30 1 TH
09:31:00 10.27 100 TH 9.90 5 A 10.30 1 TH
09:30:44 10.27 718 P 9.90 5 A 10.27 1 TH
09:30:44 10.27 100 Z 9.90 5 A 10.27 1 TH

Anybody else have a different interpretation or opinion on what may have happened in this case?
More...
 
I just had another GTC order executed, and in this case received a higher price than my limit and more than I expected.

The order was to sell 250 shares of CEG at 32.35 and the order was submitted on 9/22.

Today, 9/24, the stock opened around 32.45 and was up sharply from the previous close of 32.04. Volume looked pretty high at the open according to the chart on Yahoo Finance.

My order was filled at 32.49 which appears to be the high for the day. How did I get such a good price with a limit order at 32.35?
 
Looks like you're using Vanguard. In my experience, they don't cheat customers..

It is not unusual for market makers to lower the bid as appropriate on market open to scoop up unduly low limit orders. It's more common on thinly traded issues like options. Sometimes they will actually match your order to some other order and you'll see price improvement from your limit.
 
You are correct on the brokerage. I'm wondering if I was just a little lucky to get the high price of the day on that particular trade.

Volume looked high on the open and the stock opened higher than the previous day and then spiked even higher.

Maybe there was a large buyer who paid that high price for the day. My GTC order was probably in the queue and was acted on at the right time. That's the only explanation I came up with.

Thanks for the reply.

KW
 
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