Option Trader
Registered: Sep 2005
Posts: 1371 |
03-06-08 03:26 PM
Quote from freehouse:
In all fairness to IB, this blog entry in the Wall Street Journal states that there are now 55 different stock exchanges and trading platforms. Thus, it will probably be somewhat difficult to add all of these avenues to find liquidity:
http://blogs.wsj.com/deals/2008/03/...-merge-someday/
It would seem 5-10 of them would account for 90% of the business. IB has identified now how TOS does it.
Additional point (a critical one): A stock with low liquidity can be impacted by every buy or sell order. The additional routing destinations who offer price improvement it seems to me are using the prices on NYSE & ARCA as a baseline (even if the bid is only 100 shares in size on each) to determine the price improvement offered. The moment you hit the bid on the NYSE & ARCA you cause the price to crumble. But the whole time you are selling to these alternative destinations, they don't run away from you--so it acts as a buffer for you, and helps you get in & out of low liquidity stocks. E.g., today I sold 800 shares, 100 at a time on TOS with a 1.565 cent price improvement & the price stayed the same. The next order gave me no price improvement and knocked down the price. In short, this ATD has other critical advantages as well, especially in a trading world where the price runs away from you.
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