a question about level III

Discussion in 'Professional Trading' started by gule, Sep 5, 2011.

  1. gule

    gule

    Anyone knows what market maker can see on level III of stock trading platform?Can they see from which brokerage firm or proprietary trading company every order is sent?Thanks in Advance!
     
  2. Bob111

    Bob111

  3. rmorse

    rmorse ET Sponsor

    NASDAQ quotes are available at three levels:

    Level 1 shows the highest bid and lowest offer—the inside quote.

    Level 2 shows all public quotes of market makers together with information of market dealers wishing to sell or buy stock and recently executed orders.
    [9]
    Level 3 is used by the market makers and allows them to enter their
    quotes and execute orders.[citation needed]

    No one can "see" the orders from the public first. Even if your getting directed order flow, your system needs to respond automatically if you going to better the market, you don't have time to look at it. If you getting directed flow, your system will know where it coming from, if not, no one knows where the order is from.
     
  4. gule

    gule

    so the orders information market makers can see on their trading platform is the same as what the general day trader sees on their trading platform(such as Sterling or Laser)?
     
  5. Sterling doesn't offer depth of ECN books (you won't see individual order sizes). Most ECN's sell these data to nonpro's as well (for example: http://www.nyxdata.com/arcabookweb) , so it's not really an edge. So yes, nonpro's pretty much (can) have the same info as MM's.
     
  6. rmorse

    rmorse ET Sponsor

    All data feeds are open to anyone that is willing to pay for it and the platform supports it. What may give some an edge is NASDAQ OpenView and NYSE OpenBook. These give depth of the market outside the NBBO.

    http://www.nyxdata.com/openbook
     
  7. gule

    gule

    so what's the privilege market makers have?and what's the advantage do they have when they trade with day traders?pls tell me the details.thanks.
     
  8. rmorse

    rmorse ET Sponsor

    Market makers have faster access to the markets and different leverage offered them. I know option market makers are except from requiring locates on hard to borrow stock, I assume equity market makers have the same advantage, but I'm not sure. As customer, you can do a lot that they can do if your capitalized properly, and have the right relationships.
     
  9. gule

    gule

    that's not the privilege for MMs now,my friend.day traders can trade as fast as MMS now through direct access trading platform.And day traders can also short many stocks by borrowing from clearing house.MMs pay membership fees and they should have some privilege that day traders don't have.That's what I guess.Am I right?
     
  10. rmorse

    rmorse ET Sponsor

    DMA and Fix are very fast connections. A member of the NYSE, NASDAQ or any of the ECNs, can have a co-located server next to the direct data feed with a direct connection into the exchange. If you trading high touch, by clicking, you'll never notice the difference. However, the low lantecy they get is required for some strategies. As a day trader, you would need access to a sponsored route to get that speed. This is very difficult now with the new pre-trade check rules.

    With regard to shorting stock, I know everyone can short stocks on the easy to borrow list. If a stock is hard to borrow, you require getting a locate. Sometimes they are not available. Some traders are excempt from getting the locates and can short hard to borrows without them. This is a BIG advantage.
     
    #10     Sep 5, 2011