ECNs, Rebates..

Discussion in 'Order Execution' started by 350z, Jan 29, 2009.

  1. 350z


    for anybody who trades using direct access.

    whats the big difference and the best to use? kind of confused.

    I understand there is a possiblity of "rebates" for ECNs also.

    I used to market and limit NYSE and routed thru BELZ.

    I started using ARCA limit all the time then. I usually take orders instead of placing them just because I dont want to waste time and get squeezed. Then I am a liquidity taker. I think even when the spread is more than 1 cent, and I place a bid or offer in between I still dont get a rebate? Maybe because stuff is so quick?

    I dont pay commission on any trades, only ECN fees.

    What about ISLD or anyhting else? combinding the use of different ones on getting in and getting out, and how do some people say "some ecns are faster than others?"

    I guess I just need a crash course on ECNs but I dont know anything about where to find this?

    I guess it really doesnt matter now.. I am only using 100 share lots until I get the hang of things and start making money but I know its going to be an issue when i start using 400, 500, 1000 share lots etc.

  2. Even if you shoot a limit order you may ended up taking the liquidity because market moves and you order become marketable. Some good brokers give executions back (if you use FIX) with the liquidity indicator showing whether liquidity was taken or provided. That indication comes directly from an exchange/ECN.
  3. Isn't BELZ a darkpool?

    Trade straight to Island or BATS for market orders. Use EDGX for adding liquidity.

    I wouldn't try to worry about rebates too much because you will fool yourself into trying to capture 1 more cent so you can "add liquidity" then it moves against you 4 or 5 cents. So instead of saving your 0.003 in rebates, you lost 0.04 on your entry/exit.
  4. If you are displaying a bid or offer you should get a rebate. If you are putting orders out and getting filled by hidden liquidity and never really displaying you wont get a rebate.

    As far as speed there should only be micro-second differences for your fills. You won't notice it until after logging many hours starring at it.
  5. Tide31


    Most people I know use ARCA, as do I. It DOES matter regardless of size. I try to buy everything on the bid and sell only on the offer whenever feasible. This is 90%+ of the time. With penny spreads, I rarely miss anything. If you do this and trade say 1mm shares thru ARCA a month, you pick up $3000. At first I did it just to try to offset when I take liquidity, but now I do it to offset my commissions. As of 3/1/09 it will be .0029 for adding liq; .0028 charge for taking. Its a difference of 6/10 of a penny/share. The reason for the inversion and aggresiveness is to woo/steal liquidity from competitors. NYSE just instituted a rebate, first time in their history, of .001/share for adding liquidity as of 3/1. They own ARCA, its like the right side of your body battling the left!??

    One thing you do not want to do is put in an electronic order to the NYSE and leave it there for 5 min. If executed it is a .01/share charge. I can't imagine anyone still does this, but beware if you do. Set your front-end to leave orders on NYSE for 4min 59 secs. A lot of people do that actually. I have gone back at the end of the day, and seen countless trades executed at 5 min and several seconds. I am not kidding, the specialist stops himself against you so noone else can hit/take you, and waits so he can get the additional revenue.
  6. better re check those new arca rebates. those new rates say for 35 or 40 mil shares a month .maybe i'm wrong but it wouldn't suprise me if the prop houses and brokers don't pass threw the extra rebate. i know nasdaq charges .0025 per share for doing over 40 mil a month vol to brokers and they don't pass it threw