NYSE to eliminate "stop orders"

[romik]

IMHO the government wants to dictate a decrease in position sizing (decrease leveraging).

 

[Sergio77]

Submitted stop orders are useless and even dangerous. NYSE is protecting the public.

 

[VPhantom]

Submitted stop orders are useless and even dangerous. NYSE is protecting the public.

How are they dangerous, exactly? You seem to see a disadvantage to exchange-level stops (i.e. CME) vs broker-level?

 

[EnergyTrader]

Believe it is due to RegNMS Order Protection Rule 6.11 : Change should reduce Trade through violations exchanges are responsible to police and enforce. These outliers cause regulatory violation for the exchanges ($5k to $200k fine per violation albeit rarely enforced). Brokers are on the hook for failing to provide best execution - Common law breach of Fiduciary Duty claim - Most investors are not going to file FINRA arbitrations... Probably substantially more will in this distinct class of outliers. This puts both the broker and the exchange at risk.

If you are referring to GTC limit orders, I don't see how abolishing them reduces Trade through violations, since brokers will still offer GTC orders that are resubmitted daily as limit orders.

The only real change here is the HFT get to jump ahead of your GTC order, either because their daily limit order will beat your broker to the exchange, or at best you will only have a 50% chance of being ahead of the HFT limit orders that were placed well after your original GTC limit order.

Example : You place a GTC limit order a month ago to buy XYZ at 10.00 while the stock price was around 15. Back then HFT scalpers had no interest in placing limit orders at 10, since they had better use for their margin capital. But one month later as the market price has slid and started approaching 10.00, the HFT scalpers cannot easily scalp until your limit order is filled. This change by the NYSE eliminates this problem for HFT scalpers.