ECN vs. non ECN

Discussion in 'Order Execution' started by optionsplayer, Apr 19, 2002.

  1. Sometimes I think a little too deeply, plus keep in mind I have never been a prop trader nor seen a so called legitimate "book" of orders. I just wanted to toss this verbiage out for any feedback. This is from a direct access broker fees section: ECN access is 9.95 per trade plus 1 cent per share. Non ECN trades are a flat 9.95 per trade. My inquiry is this. Take a Cisco for example. On a level II screen at a given point in time, you could have 10 different market makers all with the same best bid of $14.95, while 5 market makers are on the ask at $14.96. (Maybe using a Nvidia or wider spread would have been more prudent for this illustration.) But my point is this. What is the difference between me actually keying the order and paying the extra penny in order to be routed to the specific market maker of my choice in the ECN, versus simply keying in the order and off it goes to an Island?? Is it merely a matter of timing and speed?? Or would you get a heads up on someone say that was willing to buy Cisco at $14.955??

    Also what is the hype with SuperSoes or SelectNet? Is there some kind of a penny arbitrage to play here against an ARCA or someone else in an ECN?? It seems as the commissions for these applications are so much steeper.

    Any comments appreciated.....