Sub-pennying MATHEMATICALLY GUARANTEES long term trading profit. SEC must regulate!

[jd7419]

Sub pennying is often not about making less than a penny between the bid/ask spread. It is about steping ahead of a real order by a minute amount. Say I am bidding 3000 aapl at 299.10. The sub pennyer will bid 3000 hidden .01 ahead of my order, once filled they will sell it out on another exchange at a higher price often pennys higher. Alot of time they are selling their stock to the original buyer who never got filled and is forced to either go to market or sweep the offer. If the sub pennyer gets filled and the market goes against him guess who gets filled?

 

[LEAPup]

Quote from Petsamo:

[B
Furthermore, the two names mentioned are Democrat hacks.
Democrats are proving they don't know how to run a country!

[/B]

A man picked up a lantern on the beach, rubbed it, and out popped the genie. She said, "I'll give you one wish."

The man said, "I want to live forever." The genie told him that's one wish she cannot grant.

The man thinks for a minute and says, "I want to live long enough to see the democrats pull their heads out of their asses."

The genie said, "you crafty bastard!"

 

[Chronos.Phenomena]

Is there any way to trade sub pennies? And be retail

 

[Chronos.Phenomena]

If you Do certain volume for example?

 

[WinstonTJ]

OP your retail broker is your problem, not HFT colo'd at NY4

 

[Occam]

Quote from Bigaeon:

Most of the sub penny prints that you see are in fact, a dealer buying from a customer - not traded openly on a exchange or ECN.

The firm that gets the order fills the customer at a better then bid price (if a customer wants to sell), and the will inventory the stock. If the firm then chooses to either liquidate if the bid gets hit or not is entirely up to them. As soon as the firm takes the position, they have market risk due to the fact that they filled a customer order at a price better than the NBBO. Why would you want to make it illegal for a broker dealer to fill its customer at a better price?

The main job of the regulators is to look after the customer, and as long as they are getting a better price from the dealer then the open market, I don't think they will change the rule.

Au contraire; B-D internalization makes a mess of open and free markets. Just look at the muni bond market, where transaction costs are 1-2% simply due to slippage. You get to a point where everyone has to trade with their broker first, then the broker trades with the market. Abysmal.

B-D internalization sub-pennying is orders of magnitude worse than flash in terms of its impact on the market and on customers. The SEC should indeed seek to ban this practice; it's just like flash, only:

1. Far more prevalent -- some issues exceed 80% internalized, whereas flash never accounted for more than maybe 3% of the market.
2. With flash there are potentially an unlimited number of bidders; with internalization there is only one -- your own broker. In an auction with only one bidder, the price doesn't tend to move much beyond the minimum bid, in this case .0001, a number very familiar to anyone with a broker that internalizes a lot.