How this will affect you : No longer ETF trading on ISLD

N

North Pesos

How this will affect the trading with this new SEC rules for to protect AMEX market:

http://www.island.com/etfchange.asp

Due to regulatory action taken by the SEC against Island, Island will no longer be able to disseminate its quotes on the QQQ, DIA, SPY, SMH, and MKH Exchange Traded Funds (ETFs) as of Monday, September 23rd. This means that the Trader Workstation will no longer display Island quotes and that Smart Order Routing will no longer consider Island as a destination for the aforementioned tickers. IB will continue to route to the NYSE, Redibook, Instinet, and Arca, and will display market data for these destinations as well as the Amex. In addition, customers may continue to send limit orders directly to Island without knowledge of Island's quotes. For additional information, see http://www.island.com/etfchange.asp.
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Message to Island Subscribers
September 19, 2002

Changes in Island ETF Business


Thanks to you, the subscriber, Island has become the largest and most liquid marketplace for trading Exchange Traded Funds such as QQQ. Given the efficiency and size of the Island market, our order book data has become a critical piece of information for any trader active in QQQ and its component securities. Unfortunately, due to recent regulatory actions taken by the U.S. Securities and Exchange Commission, Island will no longer be able to disseminate its order book information in QQQ, DIA, SPY, SMH and MKH beginning on September 23, 2002. (For more information on the specific impacts of this action, please visit FAQ).

Until recently, the SEC had given Island the choice of whether to participate in the National Market System by providing what was effectively an exemption from complying with certain SEC rules. The SEC, however, is withdrawing this exemption, and has given Island a Sept. 23 deadline for participation in the NMS. As you know, Island has always shared its order book information, both with subscribers over ITCH and with the general public through BookViewer, and Island even permits unfettered re-distribution of its market data. Island has long sought to have its order book in listed securities included in the Consolidated Quotation, and has put forward several suggestions to achieve this goal. Unfortunately, under the current regulatory structure, there is no mechanism for including Island’s order book information in the Consolidated Quote without negatively impacting execution quality.

Over the coming months, the issues surrounding this change will be the subject of industry meetings hosted by the SEC. As always, Island will consult with its subscribers to determine what will best serve their needs. Moreover, Island looks forward to working with the SEC and the U.S. Congress to revise the current regulatory structure so that Island can again disseminate its subscriber order information in all securities.

To assist us in this effort, we request that you sign the Island Testimonial (PDF, 5.4k) (if you have not already done so) and fax back to 212-231-5069, or send us your own letter regarding your ability to use Island to obtain quality executions. Island is committed to working on your behalf to operate the most efficient, liquid and transparent market possible. We look forward to working with you in the months ahead.
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Sounds to me like the e-minis are about to get a whole lot more popular. CME / Globex must be grinning ear to ear over this new one.
 
As I understand the press release, Island is only pulling the ability to see its order book. However, I believe the aggregate best bid and offer will still continue to appear on Nasdaq Level II. Can anyone verify this?
 
It looks like IB won't even display Island quotes. This has me looking more at NQ. This sure is a dirty game sometimes. I don't know how anyone can believe that the SEC has any concern for the individual trader or investor.

Dear IB Trader:
Due to regulatory action taken by the SEC against Island, Island will no longer be able to disseminate its quotes on the QQQ, DIA, SPY, SMH, and MKH Exchange Traded Funds (ETFs) as of Monday, September 23rd. This means that the Trader Workstation will no longer display Island quotes and that Smart Order Routing will no longer consider Island as a destination for the aforementioned tickers. IB will continue to route to the NYSE, Redibook, Instinet, and Arca, and will display market data for these destinations as well as the Amex. In addition, customers may continue to send limit orders directly to Island without knowledge of Island's quotes. For additional information, see http://www.island.com/etfchange.asp.


-Interactive Brokers
 
Rather than focusing on eliminating competition through regulation, the specialists should consider earning business through better and faster executions. . .but I guess that won't happen.

Don't think it will doom ISLD because they have so much other business with individual stocks, also the merger with INCA. But, it sure will put a dent in their business if not resolved. The whole thing blows my mind!
 
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