Rebate trading.

What you're thinking about is the sub-penny stocks. The sub-penny pricing on certain stocks is ending Jan.31/06 due to the NMS that the SEC is putting in.

ECNs pay for liquidity in order to entice people to use their ECN. An ECN with higher liquidity is more likely to be used by people with large orders if they are looking to get in at a certain price with minimal market impact.

So unless all the ECNs get bought out by one company, rebates will be here to stay I would think.
 
Quote from SethArb:

I thought this "gimmick" ( rebates )

was going to stop due to some reg. action this yr?...
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Yeah that is what I thought too...

nitro
 
Quote from MasterRaistlin:

Adding liquidity means joining the bid or the ask as opposed to taking it away. Then when you get filled the ECN gives you credit.

Example: Size on the bid is currently 200 on ISB....I want to get my credits for adding liquidity so I bid 1000 shares on ISB. The size on ISB is now 210 on the bid and I am at the back of the line.

Make sense?
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So you get rebate credit based on how many of your 1000 @ bid get filled I presume.

If the tape goes higher and you never get filled then you get no rebate credit - is that correct?
 
there's few guys sub .002 in commissions so i don't see how one could be postive with rebate trading. now if you have a fixed commissions thats a differnt story traing 5-10k of jdsu for $3 and getting the rebates
 
Actually they had some debate about it at the SEC, [look up proposal s71004 for details], and it when on for severl months until there was a resolution about it last june.
Basically the SEC determined that rebates didnt create a distortion as significant as the distortion that would come from regulating them. [the medicine could be worse than the disease].
They also determine that rebates where necesary for the existance of ecns purely as liquidity adders, without them being obligated to incurring at other bussiness practices not exclusive of their specif functions, that is adding liquidity.
 
Quote from TheStudent:

So you get rebate credit based on how many of your 1000 @ bid get filled I presume.

If the tape goes higher and you never get filled then you get no rebate credit - is that correct?
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that's correct...no fill = no credit
 
Quote from eusdaiki:

Actually they had some debate about it at the SEC, [look up proposal s71004 for details], and it when on for severl months until there was a resolution about it last june.
Basically the SEC determined that rebates didnt create a distortion as significant as the distortion that would come from regulating them. [the medicine could be worse than the disease].
They also determine that rebates where necesary for the existance of ecns purely as liquidity adders, without them being obligated to incurring at other bussiness practices not exclusive of their specif functions, that is adding liquidity.
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do you have an exact link to where that conclusion is found? I tried navigating the SEC site and I can't seem to find it.
 
Quote from MasterRaistlin:

that's correct...no fill = no credit
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what if you didn't join the bid but instead left a buy limit below the market early on in the day that then gets executed - does that get credit?
 
I'm guessing that your limit order would be executed immediately upon the stock hitting (or going below) your price so no. That would be removing liquidity and you would be charged (unless you have free access to specific ECNs).
 
Quote from MasterRaistlin:

I'm guessing that your limit order would be executed immediately upon the stock hitting (or going below) your price so no. That would be removing liquidity and you would be charged (unless you have free access to specific ECNs).
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I don't think that's right.

A buy limit placed below spot adds to liquidity. The only difference between my first example and the second example is where you are in the queue as a result of the timestamp.
 
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