HYBRID, good news.

Here is the response from a previous couple of questions. This response came from the NYSE
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Bob


Here is a question and my answer, would you review it for me.

If you send an order to take liquidity on the NYSE (SDOT or NX)and there is a better offer on ARCA, will the system give you the better ARCA bid/offer but only charge you the NYSE fee (.00025)?

And if you are offering out on ARCA and you are inside the NYSE (bid/ask) and somebody send an order to buy SDOT or NX, will the inside ARCA order get hit with the .002 rebate. Am i understanding this correctly?

Thanks



Good questions, and I am passing them on to the NYSE right now. My guess is that the NX orders will be filled immediately as they are now (at least until Feb when NMS kicks in). If the order is re-routed to ARCA, then maybe the "taking liqudity" fee will be charged (but if you're paying .003 and saving .01, then it's worth it).

Only if you rest orders on ARCA will you be paid. The proactive taking of liquidity has the fee.

I'll follow up Monday.


Corrected response below: (Looks like I hit 50%, LOL).

Don:

Your answer is correct for #2, if you are on Arca and lifted thru SDOT on the Arca platform you will receive the .002 rebate.

However, if you send an order to the NYSE and we route to Arca, you will be charged a rate that is higher than the .00025. At the moment it will be a blended rate of all the away markets, not yet determined...

So, we have to wait a bit for the pricing, it seems.

Don
 
Quote from Don Bright:

According to my people, there has not been the same rebate system for NYSE stocks on any ECN. Please send me a PM with details (copy of confirmations, your broker, clearing firm, etc.)...I am very interested.

Perhaps ETF's only, ??

Thanks,

Don
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My bad. The net sheets break the fees down into two columns. I was just looking at one column. DOH!
 
don not understanding your reply. so if a stock is $52.35x$52.37 and arca and nyse are on the offer at $52.37 and i route threw sdot not to pay the .003 liquidity charge and they reroute me and fill threw arca without me asking for it i get hit with a higher rate than the .000025 nyse fee? that seems a little crazy. that means they could purposely re route many orders to snag the .003 fee. seems like a conflict of interest since they own arca. please clarify
 
Quote from Huskydog:


The specialist will actually have more control once Regulation NMS goes into effect. Currently, ARCA and other ecns can trade through the NYSE quote. After Reg. NMS goes into effect, this will no longer be the case, which implies that if a sudden imbalance in orders comes into a stock and the LRPs are hit, the specialist will actually be able to control the action until his trade goes off and the auto-quoting resumes. I'm sure there are some nuances that I have missed here, but the new rules will offer interesting opportunities for traders. Just keep on top of the rules changes, adapt your trading methodology to the new rules, and you'll be fine.
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Huskydog,
If I am reading this blurb from the NYSE right, when an LRP is hit on the NYSE it changes from a "fast" market to a "slow" market:

"In general, auction representation dampens volatility and lowers trading costs. Liquidity Replenishment Points (LRPs) convert the market from “fast” to “slow” in order to allow market participants an opportunity to enter orders and replenish liquidity on either side of the market in an effort to find the right price for a security."

Since the Order Protection Rule refers to "fast" markets, doesn't this stop the specialist from gumming up/controlling price action when the LRP is hit? Thanks!
 
Quote from One:

"In general, auction representation dampens volatility and lowers trading costs. Liquidity Replenishment Points (LRPs) convert the market from “fast” to “slow” in order to allow market participants an opportunity to enter orders and replenish liquidity on either side of the market in an effort to find the right price for a security."
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Means everyone throws in their orders and the specialist picks the price.

In other words, the specialist steps in when he wants and freezes everyone out from electronic trading to pick his spot. Similiar to freezing the OB and spreading the stock, but at least when this happened, the ECNs would provide a market. Sounds like with LRPs, there will be no alternate route.
The question is whether these LRPs could be used as an old school tape reading signal. Probably not as effective since so much of the order flow will leave the floor.

Don't read into it too much, Hybrid is the NYSE's last resort to run their scams. NMS was gonna make 11 Wall a museum. With the Hybrid arrangement, Goldman gets to run their auto progs but the den of thieves will cling on to an edge, which, while smaller, seems a lot more powerful.
 
Quote from joeyata1:

don not understanding your reply. so if a stock is $52.35x$52.37 and arca and nyse are on the offer at $52.37 and i route threw sdot not to pay the .003 liquidity charge and they reroute me and fill threw arca without me asking for it i get hit with a higher rate than the .000025 nyse fee? that seems a little crazy. that means they could purposely re route many orders to snag the .003 fee. seems like a conflict of interest since they own arca. please clarify
More...

Other than CONSPIRACY, there's no reason you would get routed to arca without price improvement
 
Well...thanks NYSE ......its good to know the most we can be charged is .003. The NMS outline (beginning on p. 180) goes over the various views about how much could be charged.

"At the NMS Hearing, panelists sharply disagreed about access fees, with some panelists arguing that agency markets must be allowed to charge access fees for their services, and other panelists arguing that access fees distort quotation prices and should be banned."

I love the way this system operates.....this outline goes further to say:

"Second, Rule 610 generally limits the fees that any trading center can charge (or allow to be charged) for accessing its protected quotations to no more than $0.003 per share. The purpose of the fee limitation is to ensure the fairness and accuracy of displayed quotations by establishing an outer limit on the cost of accessing such quotations. For example, if the price of a protected offer to sell an NMS stock is displayed at $10.00, the total cost to access the offer and buy the stock will be $10.00, plus a fee of no more than $0.003. The adopted rule thereby assures order routers that displayed prices are, within a limited range, true prices."

Is this protecting the individual trader because I cant say I feel like the commission is in any way on my side....but then again i'm just a lowly trader......and what do i really know.
 
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