--------------------------------- SUBJECT: order modification/cancellation fees TO: enforcement@sec.gov, marketreg@sec.gov CC: pubcom@nasd.com, ombuds@nasd.com Dear Regulators, I am writing to you to report the ORDER MODIFICATION and CANCELLATION FEES imposed by all U.S. Options Exchanges. I want to inquire the legitimacy of the fees and to know if the fees need to be or have been approved by SEC, when they apply to individual investors. My opinion is that the fees are illegal according to federal securities and exchanges laws for the simple reason that they do not charge transactions that actually happen, so there is no log available, nor any guarantee. There are many unanswered problems and unanswered questions associated with these new imposed fees. Let's remember some: 1) what about free visibility of customers' orders and market manipulation? Do these fees obscure customers' and investors' orders, hiding visibility costs and manipulating the options' spreads? 2) What about logging of all order cancels? Assuming that a MODIFICATION OR CANCEL is expensive as an execution or more, customers' should be guaranteed a fair logging of their activities, and all options markets and brokers/dealers should be forced to provide customers and investors all logs and references to their activities and fees. As they actually do for executions. 3) What about reliability of order cancels? Among the primary slippage activities of options market makers and specialists there are ORDER MODIFICATIONS and ORDER CANCELLATIONS, that are not guaranteed and not reliable by definition. How can markets CHARGE customers a FEE for THEIR OWN BEST BUSINESS? How reliable are those cancellations so far? How customers and investors are guaranteed about reliability and speed of cancellations or modifications? Many traders have lost several thousands US dollars on late cancellations, postponed cancellations or cancelled cancellations, or slippage and all other typical specialist activities. Why do customers have to pay a fee if they don't receive in exchange more reliability and guarantees? 4) What about the CURRENT AMOUNT of cancel/modification fees? 1.20 USD for each cancel is GREATER than a small fill commission. Do there is (there will be) a limit on this? On what basis the amount has been choosed? On what basis the amount will be increased in the future? 5) Do brokers/dealers are guaranteed about fraudolent activities from options markets? Do cancel/modification activities and related payment flows are AUDITED by some INDEPENDENT INSTITUTIONS? 6) What about the tax consequences and tax treatment of cancel/modification fees? I would also like to report that the exchanges and brokers who charge the fees to the clients do not provide detailed traceable billing statements including the time, order information, and amount of the fee for each item. They only provide a total amount on daily or monthly bases. We, the investors, may not be able to keep track of what is really going on, furthermore considering current problems about internet security, this currently offers new ways for hackers to destroy customers' accounts. I ask for your immediate help, investigation, and response on these issues. Thank you very much. Regards, An investor.
and how about this one... you sell naked calls in something. you don't get a complete fill. that day, the price of the call pluments to near 0. you want to cover. guess what? you can't (without cancelling the original) because of the rules about not having buy and sell in the same option...
Qdz, this letter do not mean that we will win the battle, but anyway, it's worth a try. I would like to see wide public support for this. We must demonstrate that we are traders NOT SHEEPS!
A suggestion: Clear up the english, it can be somewhat hard to follow. I completely agree with your standpoint and will send a letter as well. I also suggest that anyone who agrees send a letter. Without numerous letters of this nature I doubt there is any chance of getting a favorable response.
Good suggestion. Let's clean up the following sentence. How about this? Another issue that I would like to bring up to your attention is regarding the billing procedure for the fees. Some brokers who pass on the fees to individual investors do not provide traceable detail statement. Their statements do not provide crucial information including time, symbol, quantity, and amount of debit/credit. Thanks.
Did you send one (or another) copy? I did. Do not forget its daylight saving time. Thanks very much. -------------------------------------- SUBJECT: order modification/cancellation fees TO: enforcement@sec.gov, marketreg@sec.gov CC: pubcom@nasd.com, ombuds@nasd.com Dear Regulators, I have heard nothing from you since I wrote you last time. So I am now writing to you again to report the ORDER MODIFICATION and CANCELLATION FEES imposed by all U.S. Options Exchanges. I want to inquire the legitimacy of the fees and to know if the fees need to be or have been approved by SEC, when they apply to individual investors. My opinion is that the fees are illegal according to federal securities and exchanges laws for the simple reason that they do not charge transactions that actually happen, so there is no log available, nor any guarantee. There are many unanswered problems and unanswered questions associated with these new imposed fees. Let's remember some: 1) what about free visibility of customers' orders and market manipulation? Do these fees obscure customers' and investors' orders, hiding visibility costs and manipulating the options' spreads? 2) What about logging of all order cancels? Assuming that a MODIFICATION OR CANCEL is expensive as an execution or more, customers' should be guaranteed a fair logging of their activities, and all options markets and brokers/dealers should be forced to provide customers and investors all logs and references to their activities and fees. As they actually do for executions. 3) What about reliability of order cancels? Among the primary slippage activities of options market makers and specialists there are ORDER MODIFICATIONS and ORDER CANCELLATIONS, that are not guaranteed and not reliable by definition. How can markets CHARGE customers a FEE for THEIR OWN BEST BUSINESS? How reliable are those cancellations so far? How customers and investors are guaranteed about reliability and speed of cancellations or modifications? Many traders have lost several thousands US dollars on late cancellations, postponed cancellations or cancelled cancellations, or slippage and all other typical specialist activities. Why do customers have to pay a fee if they don't receive in exchange more reliability and guarantees? 4) What about the CURRENT AMOUNT of cancel/modification fees? 1.20 USD for each cancel is GREATER than a small fill commission. Do there is (there will be) a limit on this? On what basis the amount has been choosed? On what basis the amount will be increased in the future? 5) Do brokers/dealers are guaranteed about fraudolent activities from options markets? Do cancel/modification activities and related payment flows are AUDITED by some INDEPENDENT INSTITUTIONS? 6) What about the tax consequences and tax treatment of cancel/modification fees? Another issue that I would like to bring up to your attention is regarding the billing procedure for the fees. Some brokers who pass on the fees to individual investors do not provide traceable detail statement. Their statements do not provide crucial information including time, symbol, quantity, and amount of debit/credit. They only provide a total amount on daily or monthly bases. We, the investors, may not be able to keep track of what is really going on, furthermore considering current problems about internet security, this currently offers new ways for hackers to destroy customers' accounts. I ask for your immediate help, investigation, and response on these issues. Thank you very