http://www.thememoryhole.org/corp/finance/sec_amex_report.htm See link. RedMan: You are on the right track to get pissed about this issue. The link above shows how the SEC knew that option arbitrageurs were the recipients of at least hundreds of thousands of SEC Firm Quote violations. The U.S. options exchanges chose not to honor quotes because they didn't want arbitrage between the option exchanges. The SEC actually caught one of the U.S. option exchanges red-handed in falsifying reports to the SEC to cover up the issue. The SEC still did nothing! The SEC will actually attack and repel the *public*, whom they are charged with protecting, in certain circumstances where it will assist larger financial institutions. Nevertheless, as they said in "Animal House", "don't get mad, get even." The SEC cannot repel the public in a court of law. The lawyers representing the option arbs just got a final judgement against the U.S. option exchanges for $43 million - on antitrust grounds. The arbs suffering the SEC Firm Quote violations have their own, unique lawsuit where they are likely to recover millions more.
OK, I apologize to alanm if I confused the issue. But you seem to just knee-jerk defend market makers with completely hypothetical excuses. And wilburbear... I know from ** daily experience ** that Specialists cheat and exchanges do nothing... Primarily because decimalization took away the ability for MMs to make a living... So cheating is the only way they can stay in business. Here is a paper written by IB founder Tom Peterffy: http://www.sec.gov/news/extra/mktstr-invites/tpeterffy111202.htm In diplomatic language he states... (1) MMs are necessary. (2) Decimalization took away MMs profit margins. (3) To maintain their income MMs are systematically abusing a variety of rules. (4) The NYSE and many dealers have no incentive to automate. People that defend Specialists and MMs as being "in compliance" with Regulations... Either have absolutely no idea what they are talking about... Or are simply Stooges planted here by the NYSE and friends. rm+
Seems to me that the conspiracy theorists have clearly taken over this thread. So, in an effort to regain focus, the original question (I believe) was: Why when I hit an ARCA am I not getting filled?
RedMan: Perhaps you had a problem reading my post. A group of options traders has just recovered tens of millions of dollars for violations very similar to the ones you incur on a daily basis. The award is final, and has already been posted by the option exchanges on their own websites. There is no conspiracy "theory". I suggest you put down your computer mouse and call a prominent securities law firm. 43 million dollars was the award. But, you've probably got better things to do with your time.
Quote from RedManPlus: OK, I apologize to alanm if I confused the issue. But you seem to just knee-jerk defend market makers with completely hypothetical excuses. I don't see where I've done that. I was taking about ECNs, and some reasons why one would not get filled. Nothing hypothetical about it. In other writings, sure, I try to look at the evidence that someone gives, and often find no reason to jump to the conspiracy leaps that some do. I find it far more useful to look for details that can help one better understand the interaction of market participants and systems, and therefore execute better. I often succeed in figuring out exactly what happened, and everyone benefits. Now isn't that better than saying "yeah, you're right, MMs/specs/brokers/other traders/office managers/clerks are all crooks and you got hosed"?
IMO: Those are computer trading systems (not algorithmic systems) that have orders out on many thinly (the norm) traded NYSE stocks. They follow the specialist, usually a penny or few outside of the best bid/offer, hoping to catch an ECN directed "easy trade" and when they get one, then it's usually just a quick flip to the specialist for the pennies. It's pretty basic and simple, but appears to be effective enough that there may be a good amount of capital and technical resources dedicated to the strategy. Of course, it's just a theory...
Used to buy on Selectnet below the best soes bid, and whack the mm. Ancient history. Now, how can arca back away? Other than a ss violation which is automatic, (thought arca allowed ss everywhere, maybe not) , who is cancelling, and how? What's the point of showing a bid, if it's not real? Doesn't sound right, Need more proof of this happening.
I think Alanm already gave the correct answer to this thread's question, but that nobody is paying attention. ARCA is a machine which does not and cannot back away from its own displayed quotes. Those quotes, however, are sometimes not executable against incoming orders, whenever such an execution would violate U.S. securities law (for example, the trade-thru rule or any applicable short-sale rule).
Why don't you post some t&s examples of these illegal occurances that you say happen to you several times a day? This might prove educational.