ARCA "backing away" on NYSE

Discussion in 'Order Execution' started by dafugginman, Apr 17, 2006.

  1. you see a quote for say 500 bid a few pennies below the highest bid on the NYSE. you go to hit, and somehow it cancels and you get a "not there" error message (using laser at Genesis) and the bid disappears. talking about fairly illiquid stocks.

    anyone else finding this? happens a few times a day to me it seems. posting quotes, than not honoring them is not legal. how is it detecting my order and cancelling? the fill should be instantaneous as i'm using arca to cross with arca :mad:
  2. if it is below da actual best bid at mkt they got every right to back off
  3. Might have something to do with Reg NMS. There were posts 2-4 days ago about this
  4. They can back off if NYSE get a better price.

    Now, even it means if the specialist shows 100 and you know you can't get anything through him, that ARCA can still back off.~ I think
  5. ok, then how can i post an arca bid, see that someone is going to hit me, then decide whether i feel like trading at that price or not.

    yes, they can do it if only 1 is on the nyse bid and auto ex is disabled.
  6. "Backing away" is illegal.
    But it happens to me several times ** every day ** on the NYSE.

    It's against Federal Law... part of the Securities Acts passed in early 30s.

    This is one way Specialists cheat all the time in low volume illiquid issues.
    It's a naked form of market manipulation.

    If you go over to "" and see enforcement actions...
    You will find that the NYSE ignores Federal Law...
    But instead "grades" each Specialist on how often he "backs away".
    The threshold is something like only 5% of the time is considered "in compliance".

    The Specialist can pick his spots exactly When he "needs" to cheat you...
    As long as he cheats less than 5% of time total.


    :cool: :cool: :cool:
  7. alanm


    Doesn't likely have anything to do with backing away. Depending on the exact situation, various ECNs will display quotes that cannot be executed against because of trade-through and tick test rules. You may be able to find the details on their sites.

    Could also be stale quotes, though I don't know why it would cancel - that could be something specific to Genesis. I trade listed on ARCA a fair amount, and don't recall getting cancels. INET, I think, cancels in some circumstances (like if the market moves against your short-sale order in a stock subject to the tick test).
  8. reg


    The original poster was referring to his order not getting executed on ARCA, an ECN. This had nothing to do with the specialist.
  9. Nice head fake.

    alanm, you just changed the discussion from the NYSE to ECNs.

    "Backing away" or failing to maintain a firm quote by Specialists is common.

    Here is excert from SEC versus CHX:

    <IMG src="">

    This is ** just ONE ** co-Specialist with 113 violations.
    Must have been 1000s upon 1000s overall.

    Here is the link:

    The Chicago Stock Exchange did absolutely nothing about it.

    The SEC had to ** litigate ** for months/years to bring pressure to bear on the CHX.

    The NYSE is far more powerful... and is, effectively, a law unto itself.
    Only someone like Spitzer could take on the NYSE and it's Specialists.


    :cool: :cool: :cool:
  10. alanm


    I didn't move it - someone else did, and then the original poster went with it (I think - the language is too imprecise to be sure :) ).

    In any case, if we're talking about NYSE quotes, you're better off always assuming they cannot be hit because they are, by their nature, somewhat to extremely stale. Just because you're unable to hit it does not mean that something illegal has happened. The usual excuse is "stock ahead", and this could be true anywhere between 0 and 100% of the time, depending on who you talk to :)
    #10     Apr 17, 2006