Options execution difference between brokers

[dragonman]

Quote from ASE1245:

I honestly don't remember if the firm gets a match with the public, but the exchanges used to have specialist and DMM (designated market maker). Then payment for order flow started to direct orders to an exchange. Then, the idea of directed order flow started to heat up competition. Any member of the exchange, can make a deal with an order flow provider to direct their order flow to the exchange, and be their DMM for their orders. They are also responsible for the payments for order flow. The exchanges allow that party 40% of the flow for directing it to that exchange. On the Amex, besides the specialists, GS, Timber Hill and Barclays receive their own directed orders and sometimes make deals with other firms.

Thanks, this is very helpful. So basically in such situations a public customer can actually buy at the bid or sell at the ask?

 

[ASE1245]

Correct. I just checked with the NYSE AMEX, all customer go ahead of MM, specialist and directed order flow order. So if you bidding, and it trades there, and your order comes up based on time and price (First bid at that price gets executions next), then you'll get executions.