ISE options exchange proposes punitive cancel charges for active traders

[wilburbear]

Quote from theTaoTrader:

That's the reason. "they don't want non registered traders from attempting to be pseudo mkt makers." It does cost ISE in terms of increased network traffic, which is huge for an option trading platform.

In less enlightened times, people would say "How dare the SOES bandits try to enter a NASDAQ stock between a market-maker's bid and ask. Then the bandits demand that their bid or ask be reflected in the stock's quote." Now it's abundantly clear that the market-makers were the Evil Empire and the SOES traders the Jedi.

Any discouragement of liquidity is a battle which apparently needs to be fought over and over again - even amongst fellow traders who apparently take the side of the institutions!

 

[Cdntrader]

Quote from wilburbear:

Yes, the rule primarily applies to active traders. Presumably, most ET participants are active traders.

Beware of your favorite exchange using a cancel fee to raise revenue when things get slow. The average *hedge fund* is down on the year. This seems the wrong time to increase transaction costs.

But isnt the fee required to "ease congestion within the ISE order system"?

Or is this just a bogus argument designed to hide the fee grab?

maybe they should upgrade their systems and forget the fee

 

[wilburbear]

Quote from Cdntrader:

But isnt the fee required to "ease congestion within the ISE order system"?

Or is this just a bogus argument designed to hide the fee grab?

maybe they should upgrade their systems and forget the fee

I'm not aware of anyone who has observed congestion in the ISE systems.

 

[metooxx]

Quote from Cdntrader:

But isnt the fee required to "ease congestion within the ISE order system"?

Or is this just a bogus argument designed to hide the fee grab?

maybe they should upgrade their systems and forget the fee

You answered your own question ...

 

[Kicking]

the other day I paid about $10 in cancel fees and commish to get in and then out on a 1 lot order. When you trade options you need to cancel replace all the time , there is no other way around it even if you are NOT an active trader.

 

[nitro]

Quote from Kicking:

the other day I paid about $10 in cancel fees and commish to get in and then out on a 1 lot order. When you trade options you need to cancel replace all the time , there is no other way around it even if you are NOT an active trader.

You mean you don't like being a stationary target?

LOL

nitro

 

[theTaoTrader]

Quote from wilburbear:

Has the ISE experienced constraints in its network traffic? I haven't seen any. Thanks.

Not yet. People are developing automated order cancel/resubmit programs that work like market makers. This cancellation fee is meant to deter them.

Put in another way, without the fee the ISE will have network traffic problem once these programs are up-running. Options market making is very demanding on that aspect.

 

[theTaoTrader]

Quote from wilburbear:

In less enlightened times, people would say "How dare the SOES bandits try to enter a NASDAQ stock between a market-maker's bid and ask. Then the bandits demand that their bid or ask be reflected in the stock's quote." Now it's abundantly clear that the market-makers were the Evil Empire and the SOES traders the Jedi.

Any discouragement of liquidity is a battle which apparently needs to be fought over and over again - even amongst fellow traders who apparently take the side of the institutions!

I understand the frustration if someone just want to split the bid/ask and need to adjust their orders. This fee, which is meant to deter pseudo market makers, can really hurt. But options market making is traffic intense. I don’t know for a fact but I would not be surprised that ISE designated market makers have their fee tied to their network traffic (mostly cancel/re-submit bid/ask when the underlying changes).

 

[just21]

ISE market makers pay millions for the privelege of quoting, I am sure they do not want the competition.There is still the BOX and the PCX going to pennies.

 

[range]

Quote from theTaoTrader:

People are developing automated order cancel/resubmit programs that work like market makers. This cancellation fee is meant to deter them.

I imagine this is exactly the issue that is driving the proposed rule. The manual traders (including me) are just collateral damage caught in the crossfire between the exchanges and the computers.