Limit-NX feature on NYSE stocks kills volatility

[InyOutty]

Originally posted by Trade_Cents


My good man - specialists can only take offers to liquidate positions not INITIATE positions. This does not mean that once a stock is trading at the offer price the specialist can take an offer, unless he is liquidating a position.

Rule 104 - Dealings by Specialists

(A) The specialist may liquidate a position by selling stock on a direct minus tick or by purchasing stock on a direct plus tick only if such transactions are reasonably necessary in relation to the specialist's overall position in the stocks in which he is registered; and the specialist has obtained the prior approval of a Floor Official;

Trade_Cents,

That doesn't mean the specialist can't participate in the offer. He can take up to 1/2 the offer size once it is "tripped," subject to few restrictions.

Rule 104 (b):

...the purchasing of stock on a direct plus tick or a zero plus tick should be effected in conjunction with the specialist's re-entry in the market on the opposite side of the market from the liquidating transaction where the imbalance of supply and demand indicates that immediately succeeding transactions may result in...a higher price (following the specialist's purchase of stock on a direct plus tick or a zero plus tick).

Translation: The specialist can "reload" at the bottom to provide liquidity for the ensuing rebound.

Specialist do this routinely and make a lot of money from it.

 

[InyOutty]

Originally posted by lescor


One thing I have noticed about NX though is that some (quite a few) specialists ignore it. I get price improvement on NX orders fairly regularly, which can be good or bad depending on what you are trying to achieve. But if it's supposed to be electronic and instant, then in this situation the specialist is still involved, which is wrong.

lescor,

This happens primarily because other ITS participants (CHX, Boston, etc.) "block" the NX print by bidding above the NYSE bid (when you are trying to sell) or offering below the NYSE offer (when you are trying to buy). The other potential reason is that the specialist freezes the book due to an imbalance.

 

[lescor]

Originally posted by InyOutty


lescor,

This happens primarily because other ITS participants (CHX, Boston, etc.) "block" the NX print by bidding above the NYSE bid (when you are trying to sell) or offering below the NYSE offer (when you are trying to buy). The other potential reason is that the specialist freezes the book due to an imbalance.

I never route to other exchanges and don't use a 'best price' execution route, so how could the actions on other exchanges matter? I've seen it happen on thin, slow moving stocks where there were no other prints right after mine. On certain stocks I always get the bid or offer price, so it seems that some specialits honor nx and some don't. But if it's all electronic how could this be? Maybe I'm missing something. Isn't NX basically the price that the new york specialist has posted?

Corey

 

[InyOutty]

Originally posted by lescor


I never route to other exchanges and don't use a 'best price' execution route, so how could the actions on other exchanges matter? I've seen it happen on thin, slow moving stocks where there were no other prints right after mine. On certain stocks I always get the bid or offer price, so it seems that some specialits honor nx and some don't. But if it's all electronic how could this be? Maybe I'm missing something. Isn't NX basically the price that the new york specialist has posted?

Corey

lescor,

Whether you are routing to other exchanges ain't the point my man. Regional exchanges (and other ITS participants) can squeeze in between you and the NYSE bid (or offer). When they do, YOU CANNOT NX that bid or offer.

For instance, if you try to route an NX order to take an NYSE offer at 51 and CHX is offering at 50.99, you won't get 51. The specialist may send your order to CHX or fill you at 50.99 (or below) from his own account.

"If a better bid or offer exists at another marketplace, the order will be routed to, or executed at the better price." (NYSE web site)

 

[Bryan Roberts]

i would almost swear that the TXN specialist has found a way to block the NX prints....in the past few weeks i have sat on decent sized bids and offers without getting filled and of course the stock keeps moving. i have been using NX for awhile and have a good feel for when i should and should not be filled.

has anyone else that uses nx frequently had this same experience???? and by the way Don, i use NX exclusively and i do get price improvements all the time...rarely do i feel i have gotten a bad fill..... when i want to buy..I WANT TO BUY!!!!!

 

[darkhorse]

Seems to me that daytraders are like a school of piranha taking bites out of bigger/slower fish.

When the bigger/slower fish are depleted due to unfavorable market conditions, the once cooperative piranhas are forced to turn on each other, making a bloody mess...and assuring that only the fastest/meanest survive.

 

[metooxx]

Originally posted by darkhorse
Seems to me that daytraders are like a school of piranha taking bites out of bigger/slower fish.

When the bigger/slower fish are depleted due to unfavorable market conditions, the once cooperative piranhas are forced to turn on each other, making a bloody mess...and assuring that only the fastest/meanest survive.

Very deep ...

 

[darkhorse]

Originally posted by metooxx


Very deep ...

LOL If that was an intentional pun then it's a really, really bad one...

As the food chain dwindles it's every man for himself...all you prop traders, look to your left and right, those are no longer your friends, you are surrounded by the enemy now...