Losing traders are a particularly litigious bunch. Any gap, news, halt or other act other than one of God opens up the opportunity for the shifting of blame onto the executing broker. I understand the Why.
My only concern would be whether or not my protective stop is honored. Would this mean that the broker, and not the NYSE, would hold my stop and execute it as a market order when it hits that price?
What a poor decision... stop orders are NOT the problem... They should address the real problem, the only people who ever lost money are those who placed orders ... they should just eliminate orders , call, put, buy and sell and no one will lose any money
Bad idea! Next will they eliminate Market orders? This makes no sense. Either the SEC are idiots, or this is a ploy to push back on the "undisclosed SEC rule filing". (I'm hoping it is the latter) I personally try not to use Stops, since I know what can happen, but I sometimes form similar constructed trades at the broker (if condition, then market order). The elimination of GTC seems misplaced, unless other organizations can fill that role without additional losses to the client (retail traders). Anyone have the "SEC rule" documentation that prompted this?
So, because brokers let traders use order types they don't understand, and subsequently complained about, now nobody can use them. In French we call that leveling from the base, and it's never a good thing (i.e. it's why our education system sucks: everybody's waiting for the slowest in the group.) How hard is it to understand that a stop is a triggered market order? I understand that brokers will simply do more work now (i.e. IB's SMART routing already did a lot), but it still seems to me like this de-centralization of stops may cause slower but more volatile runs when popular levels are hit, increasing slippage. Especially in contrast with CME futures stops at the exchange which, at least in theory, are orderly (although I don't like how those can technically be blown through without triggering).
Stops and GTCs have nothing to do with each other. Stops are tricky, but GTC are not. GTC protects individual investors from moves after-hours. Most importantly, unlike a Stop, which is tricky because it is against the market flow (sell if price below, buy if price above). a GTC order simply resides in the stack as a Bid or Offer. The criminals at the HFTs hate discretionary GTC orders because they want to skip over discretionary orders when they attack, trading only with themselves instead, then hop right back to where they were before the attack. The GTC order ensures you get paid on the attack. Hence the NYSE's action. Just disgusting.
Believe it is due to RegNMS Order Protection Rule 6.11 : Change should reduce Trade through violations exchanges are responsible to police and enforce. These outliers cause regulatory violation for the exchanges ($5k to $200k fine per violation albeit rarely enforced). Brokers are on the hook for failing to provide best execution - Common law breach of Fiduciary Duty claim - Most investors are not going to file FINRA arbitrations... Probably substantially more will in this distinct class of outliers. This puts both the broker and the exchange at risk.
Email thread inquiry and response from TD Ameritrade: ------------------ Thank you for the e-mail and inquiry. I can confirm that we will continue to accept Stop and GTC orders as nothing has changed in light of the NYSE announcement. To clarify further, our order handling system allows us to continue to accept these order types and route them so they still receive the best execution. I hope this helps. Should you have any other questions, please let me know. Thank you. Kind Regards, Kinga Sliwa Client Liaison 866.839.1100 thinkorswim, Division of TD AMERITRADE, Inc. 600 west chicago avenue, suite #100 chicago, IL 60654-2597 Member FINRA | SIPC trademark, all rights reserved Original Message Follows: ------------------------ The NYSE is expected to eliminate "stop orders" and GTC orders in February 2016. It is my "assumption" that this will not impact my ability to place GTC orders, or Stop Orders, as these are likely managed by TD Ameritrade or TOS. Can you clarify if this change will impact retail traders that use TOS? And if so, how? (poor execution speed, increased slippage in orders?) Regards, ---------------