Observations on the NYSE specialist.

[lilboy716]

I was told it is the case. I never checked up on it. My shorts are usually harder to get filled. Does anyone know if its the same for ECN?

I've always assumed that if my shorts got filled, whatever left on the offer at the same price are shorts as well. Once they get filled, then I would know I have company.

Quote from jimrockford:

cstu,

It has been claimed, on this thread, that NYSE gives priority to long sell orders over short sell orders. I doubt this. Is it true?

 

[Hamlet]

Quote from Avid_Consumer:

don't assume too much. i've been making more per year, for the last 3 years trading futures independently than i was in a support role on the fixed income floor of a major bank after 5 years. god, do i sound that ignorant. i'm just into trading, not regs, and i'm fully systematic with manual execution.

one thing these guys have yet to demonstrate is a sincere commitment to the spirit of electronic trading. the good old boy thing isn't a good mix with global electronic capitalism as much as i appreciate the tradition.

how can you take your p&l seriously without an emphasis on fills? your casual attitude toward fills seems contradictory to your rigorous defense of the system ... or is it more built into your cost structure than any sort of execution edge? how long have you been trading?

You said that you were new to trading stocks, I think, so I assumed you were new to trading. Forgive my assumption.

I didn't say that fills were not important, just not as nearly as important as many other things, especially for someone new, even new to just stocks. It is more important of course if you are a systems trader, especially automated. Learn the order handling rules (don't be another Rockford), they are very simple, then make sure they are carried out (they almost always are).

 

[cstu]

Jim

Your doubts about short orders are well place. Time and price are the factor not long/short. Two things.

1. Your short order is only a "held" order at one specific up tick price and it is not good at that price until it is a proper uptick. For instance if you enter a short at 30 and it is a down tick any long orders at that limit will be marketable first even if they are entered after you. Once it tick to 29.99 you will actuall get your place in line behind whatever is at that level. If you enter an order that is a "good" plus tick it will always be time priority.

2. NYSE ticks are only determined by NYSE sales which may be a source of confusion.

Also, and this is showing my age, but it was the last time I was on the floor six years ago. Short orders at that time (if it was a new order coming into dot) had to be elctronically entered. The specialist would see a short icon on computer and they had to press a button giving last sale info so the short could get properly entered in the book. Sometimes they could forget or in the two seconds it took orders could beat it into the book.

I suspect by now both problems have been addressed. The first is that the Specialist I am told is reporting all sales through the computer to the world. Therefore, all proper ticks should be in computer. (previously with reporters doing sales a crowd to crowd trade would not update last sale on computer automatically.

Anyway I hope this saves someone from high blood pressure when they don't get executed on a short.

 

[jimrockford]

Quote from cstu:

Jim

Your doubts about short orders are well place. Time and price are the factor not long/short. Two things.

1. Your short order is only a "held" order at one specific up tick price and it is not good at that price until it is a proper uptick. For instance if you enter a short at 30 and it is a down tick any long orders at that limit will be marketable first even if they are entered after you. Once it tick to 29.99 you will actuall get your place in line behind whatever is at that level. If you enter an order that is a "good" plus tick it will always be time priority.

2. NYSE ticks are only determined by NYSE sales which may be a source of confusion.

Also, and this is showing my age, but it was the last time I was on the floor six years ago. Short orders at that time (if it was a new order coming into dot) had to be elctronically entered. The specialist would see a short icon on computer and they had to press a button giving last sale info so the short could get properly entered in the book. Sometimes they could forget or in the two seconds it took orders could beat it into the book.

I suspect by now both problems have been addressed. The first is that the Specialist I am told is reporting all sales through the computer to the world. Therefore, all proper ticks should be in computer. (previously with reporters doing sales a crowd to crowd trade would not update last sale on computer automatically.

Anyway I hope this saves someone from high blood pressure when they don't get executed on a short.

cstu,

Thanks for answering.

If I understand correctly, then, a short sell order can execute only if it meets its tick test. If a short sell order is resting on the offer, and either it meets its tick test or it has no tick test (ETFs, etc.), and it has priority on the specialist's book, a subsequently entered long sell order, also at the offer, gets in line behind the short sell order, and does not take priority over the short sell order. Do I have this correct?

If somebody notices a delay in the execution of their short sell order (which people have reported on this thread), it is generally due to the applicable tick test rule delaying the short sell order's execution, but it is not due to long sell orders taking priority over short sell orders. Correct?

 

[jimrockford]

cstu,

I appreciate your debunking the incorrect claim that long sell orders have priority over short sell orders.

It seems to me that you were also trying to say that floor brokers and their customers, on the basis of size priority, rather than time priority, can sometimes jump ahead of equally priced orders represented at the top of the specialist's book.

Is this correct?

 

[rubberbird]

Quote from lilboy716:

I was told it is the case. I never checked up on it. My shorts are usually harder to get filled.

I've always assumed that if my shorts got filled, whatever left on the offer at the same price are shorts as well. Once they get filled, then I would know I have company.

you are correct. shorts are always at the end of the line. but this outright discrimination won't be for much longer as the pilot program was a success, and the uptick rule on high cap stocks will soon be eliminated.

 

[jimrockford]

Quote from rubberbird:

you are correct. shorts are always at the end of the line. but this outright discrimination won't be for much longer as the pilot program was a success, and the uptick rule on high cap stocks will soon be eliminated.

Rubberbird,

cstu is a former NYSE specialist. He has just confirmed that long sell orders do not have priority over short sell orders on NYSE. The uptick rule, where applicable, prevents short sell orders from executing where this would result in a price below the last sale price. The uptick rule does not give long sales priority over short sales. If the uptick rule does not bar execution of short sell orders at the top of the specialist book, then these short sell orders preserve their priority within the book, and any subsequently arriving, equally priced long sell orders get in line behind the short sell orders, because the short sell orders will have time priority within the book.

 

[rubberbird]

Quote from jimrockford:

Rubberbird,

cstu is a former NYSE specialist. He has just confirmed that long sell orders do not have priority over short sell orders on NYSE. The uptick rule, where applicable, prevents short sell orders from executing where this would result in a price below the last sale price. The uptick rule does not give long sales priority over short sales. If the uptick rule does not bar execution of short sell orders at the top of the specialist book, then these short sell orders preserve their priority within the book, and any subsequently arriving, equally priced long sell orders get in line behind the short sell orders, because the short sell orders will have time priority within the book.

finally, I can engage in a market discussion on ET. Great!

Sir, I respectfully disagree with you, and whomever you are saying is a specialist, well, they don't know the rules then. A short sell order is placed a the end of the food chain. For example, if I put in a market short sell order on the close, all the longs must be filled, and then the shorts are filled. It is too often that me, and a few other shorts or so they say, are NOT filled, even though a huge print went up. When I call to complain, I get the token, "well XYZ longs went ahead...blah blah blah".

ps the uptick rule has nothing to do with this at all.

 

[jimrockford]

Rubberbird,

this is one of the things that cstu, the former specialist, said:

Quote from cstu:

Time and price are the factor not long/short.

You seem to very confident that this is not true. Your confidence does raise doubt on my part.

Is it possible that the explanations you got, about longs ahead of your shorts, came from employees of your broker who didn't know what they were doing? I complained to my broker about problems executing SPY, QQQQ, and IWM orders, and I was sometimes told that my order did not execute, or was delayed, because the uptick rule required that my order be delayed until the next uptick. This was totally incorrect because the uptick rule does not apply to these ETFs. The broker employees were clueless, and refused to believe me, even when I explained that the uptick rule does not apply to those ETFs. So I wonder if this could possibly be mythology you are getting from misinformed broker employees? If not, what is the source of your information, that makes you so confident? I'm not trying to be a wise-ass, I'm just trying to get to the real truth of the matter, since we are getting conflicting explanations.

Another possibility, which would be greatly appreciated, would be if cstu could re-word his own explanation so that it would be so clear, obvious, and emphatic, that even the kindergarteners in this thread (I'm not referring to you rubberbird) would be convinced.

Another question: can anybody cite the exact rule which they believe gives longs priority over shorts?

 

[rubberbird]

Quote from jimrockford:

Rubberbird,

You seem to very confident that this is not true. Your confidence does raise doubt on my part.

Is it possible that the explanations you got, about longs ahead of your shorts, came from employees of your broker who didn't know what they were doing?

Sir, I am 100% sure of what I say. Believe me, I would know. There is 0% chance that the employees did not know what they were doing. They have the responsiblity of calling the floor and getting an explanation. I must accept that explanation, or it is not over. Unfortunately, when the explanation comes back like i've indicated, I have to accept it. Like I said, if I put a "market" short order on the close, even on an uptick, I don't get filled 30% of the time, even when I see a huge print. The explanation comes back, "the longs were filled ahead, and you and other shorts (to make me feel better) were not executed."

this BS will be coming to an end soon as the pilot program showed the NYSE that the stocks that are exempt from the uptick rule fared far better this past year than those that had an uptick rule. This would make sense as the more shorts in a stock, the better the chance of it rising. Check out the stocks that are exempt. stocks like ahc, agn, brl, bsc, mil, mon, pd, vlo, usg, bni to name a few. All had banner years, and all were exempt from the uptick rule.