SuperSOES is here!
- Thread starter TraderJimR
- Start date
Trader J/Babak,
Routing direct to SS would certainly makes sense if there were no ECN liquidity available. However, if there was, why not pay a little more in Commish for a better/quicker fill. ARCA has direct connections with at least 3 other ECNs whereby if there is contraside liquidity in their books, ARCA goes after it directly and bypasses the SNET pref route.
Additionally, as I have seen SS stocks trade, I have noticed a greater tendency for ECN's to dominate the inside price levels as MM's stay away assumingly for fear of the o second interval delay and SS executions against reserve volume. THus, if you enter a SS order while only ECN's are at the insede, the order is held by NAZ waiting for a MM to join or the ECN(s) to fill and move.
Plus the same old issues of not knowing how far back you are in the SS queue when there is momentum, versus ECN volume that you know is available as long its on the screen, etc. Just my thoughts as obviously we will all start to figure out the ramifications of SS now that it is fully live.
Routing direct to SS would certainly makes sense if there were no ECN liquidity available. However, if there was, why not pay a little more in Commish for a better/quicker fill. ARCA has direct connections with at least 3 other ECNs whereby if there is contraside liquidity in their books, ARCA goes after it directly and bypasses the SNET pref route.
Additionally, as I have seen SS stocks trade, I have noticed a greater tendency for ECN's to dominate the inside price levels as MM's stay away assumingly for fear of the o second interval delay and SS executions against reserve volume. THus, if you enter a SS order while only ECN's are at the insede, the order is held by NAZ waiting for a MM to join or the ECN(s) to fill and move.
Plus the same old issues of not knowing how far back you are in the SS queue when there is momentum, versus ECN volume that you know is available as long its on the screen, etc. Just my thoughts as obviously we will all start to figure out the ramifications of SS now that it is fully live.
I don't quite understand this: If you SNET pref. your order has to be 100 shares higher than the quantity dsplayed? So you can't use SNET for round lots?
From SS FAQ:
Must preferenced SelectNet orders be sent in amounts 100 shares greater than displayed size?
What happens if an order was sent with less than the MMâs displayed size?
Yes. All SelectNet orders preferenced to MMs must be non-liability orders. These orders must be at least 100 shares greater than the displayed size and designated as All-or-None (AON) or must have a minimum acceptable quantity (MAQ) of 100 shares greater than the displayed quote. Orders that are not sent with the appropriate size requirement (e.g., 100 shares over MAQ) will be automatically rejected by the system. However, if an oversized order is entered and is lacking a qualifier of AON or MAQ, Nasdaq will append the MAQ and accept the order. Market participants may send an order to an ECN as they do today.
From SS FAQ:
Must preferenced SelectNet orders be sent in amounts 100 shares greater than displayed size?
What happens if an order was sent with less than the MMâs displayed size?
Yes. All SelectNet orders preferenced to MMs must be non-liability orders. These orders must be at least 100 shares greater than the displayed size and designated as All-or-None (AON) or must have a minimum acceptable quantity (MAQ) of 100 shares greater than the displayed quote. Orders that are not sent with the appropriate size requirement (e.g., 100 shares over MAQ) will be automatically rejected by the system. However, if an oversized order is entered and is lacking a qualifier of AON or MAQ, Nasdaq will append the MAQ and accept the order. Market participants may send an order to an ECN as they do today.
Kicking,
A round lot is a quantity in 100's of shares yes? So why do you think SS will not allow a pref order for a round lot? All NAZ is saying is that the pref order has to be for at least 100 shares more than the displayed size of the MM. SInce MM's have to post in increments of 100 shares, again I am not sure what the question is. Please elaborate.
A round lot is a quantity in 100's of shares yes? So why do you think SS will not allow a pref order for a round lot? All NAZ is saying is that the pref order has to be for at least 100 shares more than the displayed size of the MM. SInce MM's have to post in increments of 100 shares, again I am not sure what the question is. Please elaborate.
Naz implemented the rule to eliminate the "dual liability" issues of SOES and SNET. Pursuant to the firm quote rule, a MM has an obligation to fill an order (preferenced) to him at his displayed price and volume. Thus if MSCO is offering 500 shares at $50 and a trader sends a SNET pref buy order for 500 shares at $50, MSCO is obligated to fill it unless he was already in the process of filling a similar order and/or changing his quote. This type of order was referred to as a "liability order".
The problem was that while MSCO was filling a SNET pref order and assuming $50 was the inside offer price, he could be SOES'd as well. Since SOES orders are autoexecuted against the MM's quote and they don't even know they were SOESD until after the fact, MSCO could potentially have sold 1000 shares when he only wanted to sell 500, thus the term "dual liability".
By mandating that all SNET pref orders are 100 shares above the MM's quoted volume, they become non-liability orders and therefore the MM's have no obligation to fill them. Meanwhile we can only hope that they are getting rapid fire SOES executions via the SS 0 second delay and SOES executions directly against reserve volume!! Hope that helps.
The problem was that while MSCO was filling a SNET pref order and assuming $50 was the inside offer price, he could be SOES'd as well. Since SOES orders are autoexecuted against the MM's quote and they don't even know they were SOESD until after the fact, MSCO could potentially have sold 1000 shares when he only wanted to sell 500, thus the term "dual liability".
By mandating that all SNET pref orders are 100 shares above the MM's quoted volume, they become non-liability orders and therefore the MM's have no obligation to fill them. Meanwhile we can only hope that they are getting rapid fire SOES executions via the SS 0 second delay and SOES executions directly against reserve volume!! Hope that helps.
I have found that superSoes has made trading worse. The spreads are getting too wide. It is almost impossible to get out of a bad trade with a break-even or 1 cent loss. If the stocks would at least have decent runs I wouldn't mind the wide spreads but the runs also seem to have become smaller. Traders seem to panic out after a small gain on fears that the bid could just drop forcing them to cover with a loss. With everyone dumping the stock so quickly it never has a chance to make a decent move. I trade with a room of over 45 traders and none is happy over these changes.
Mugshot,
A fear I had all along with SuperSoes. I felt it would be good if traders would allow profits to run and less liquidity on the offer (when running up) due to SS would equate to nice long plays and vica versa on shorts.
But if traders are too scared to let profits run, and liquidity in general is thin when there is momentum thereby making it difficult to take small losses....well that kinda hurts the risk/reward potential of a momentum play doesn't it.
A fear I had all along with SuperSoes. I felt it would be good if traders would allow profits to run and less liquidity on the offer (when running up) due to SS would equate to nice long plays and vica versa on shorts.
But if traders are too scared to let profits run, and liquidity in general is thin when there is momentum thereby making it difficult to take small losses....well that kinda hurts the risk/reward potential of a momentum play doesn't it.
TradeCourse,
I agree with you. I think it will take a few weeks for everything to sort itself out. Most traders, including myself, are using smaller share sizes. I believe that once traders become more accustomed to SuperSoes their volume will increase which will make for a different trading enviroment. I am sure that MM's are also going through their learning curves and might act completely differently within a few weeks.
I agree with you. I think it will take a few weeks for everything to sort itself out. Most traders, including myself, are using smaller share sizes. I believe that once traders become more accustomed to SuperSoes their volume will increase which will make for a different trading enviroment. I am sure that MM's are also going through their learning curves and might act completely differently within a few weeks.
