Taking the volume away from the floor

[bungrider]

Back in the day I used to love illiquid stocks...

One stock I would trade was listed (NYSE) and only did about 50 or 60k per day...

The specialist was the epitome of "prick" -- and despite it being a pretty easy stock to trade, the hardest part was fighting the little fucker for market orders coming in...I'd buy/sell limit (I knew if I used a market order he would do the 'ol GE hat trick) and the little shit would penny me and I'd be lucky to get 1/4 of the market order coming in...

One thing I would try to do is use Island to try and step in front of him, but for some reason, whoever else was trading these illiquid stocks would rather pay a higher spread at the NYSE for a slower execution, which, of course, seems ABSOLUTELY moronic to me (and presumably you too).

So the question I have is --- WHY were my Island limits traded through? I mean, not a single one executed in many attempts. I'd assume that any retail customer with schwab, fidelity, etrade, ameritrade, datek etc. should be preferentially routed to ISLD, and I'd be confident that in an illiquid stock that only does maybe 50k/day, much of that volume would have to be retail (of course maybe I'm totally off here and that is why ISLD never gets hit).

Maybe INCA would be better, but I dunno...

Anyone else try to set up their own market making operation to yank the volume off the floor?? Seems that in addition to making a bit of cash, you'd be doing the world a favor by taking more volume away from the NYSE floor.

 

[JMartinez]

What was the size you were posting vs. the size the specialist was printing? Could be your size was small? If not then because the stock was so thin that noboby really looked at it. Because if that were the case in a heavier stock, you would get picked off if you had a better price then NY. Remember, If you get filled very quickly on an ECN then most likely you just got picked off because the market is moving against you and somebody can arb it.


Jeff--

 

[prgtrdr]

>> WHY were my Island limits traded through? I mean, not a single one executed in many attempts. I'd assume that any retail customer with schwab, fidelity, etrade, ameritrade, datek etc. should be preferentially routed to ISLD, and I'd be confident that in an illiquid stock that only does maybe 50k/day, much of that volume would have to be retail (of course maybe I'm totally off here and that is why ISLD never gets hit).

The answer is that most retail brokers route to NYSE as the default destination, even if there seems to be a better price away. I say "seems to be" because there is about a 40% chance that an NYSE order will get a price better than what is being displayed in their quote (depending on the stock, order size, etc.).

So it's a judgement call on the part of the brokerage firm. They think of it in the same way that, "Nobody ever got fired for buying IBM" -- "Nobody ever got fired for routing to the NYSE." But I think that with the SEC pushing Rule 11Ac1-5 statistics that this behavior may change soon.