Future Trading Landscape

Discussion in 'Order Execution' started by hmap1, Jun 20, 2002.

  1. hmap1


    Okay, with all of these mergers of the ECN's going on, it seems that they are collectively rebelling against Nasdaq and the upcoming release of Supermontage. I am trying to get a handle on the future landscape of the market. Will we have a world where you can execute your order on the Island/Inca exchange or the Arca/Redi exchange or the Nasdaq Supermontage exchange? If so, I wonder how the landscape will be? Will executions improve or will less visibility and proactive executions happen? It seems that Redi is not participating in Supermontage because of its merger (at least so far) and Supermontage will take over Supersoes and Selectnet. Redi traditionally has a proactive feature in order executions and if they won't be on a nonexistent Supersoes or Marketmaker proactive logic, then what? Do you expect a drawdown in execution quality with all of these players in the short-term while things get organized and decisions are made among all of these ECN's and players? I mean, there are so many issues that are at play here. With the Redi-Acra merger, Redi has odd-lot rules that consist of not breaking up an even-lot order to fill an incoming odd-lot order, they only do exact matches in their book. Arca on the other hand- fills anything, even or odd against anything else. They are combining books, so then what? Basically, what are your views on matters and do any of you have any questions about the future landscape yourselves. Thanks.
  2. Kinda seems like it'll still be like level 2 now, with independent ECN's, most of which can talk to each other as well as SM.

    Personally, I think supermontage is just going to be a suped-up version of Primex, which failed MISERABLY because everyone knew it was unfair for MM's to see public orders on ECN's whereas everyone else could NOT see MM's INVISIBLE orders in Primex.

    Anyone else still remember the Primex fiasco?? IB disabled Primex less than a week after it was forced upon us due to popular hatred for it...

    MM's quickly learned that while Primex was really good for them, everyone else hated it and the idea behind it, so they had to come up with something a little more sneaky and less outwardly deceitful and obnoxious.

    Supermontage is an older, wiser, somewhat compromised primex that other ECN's can hit, as opposed to primex, where MM's told brokers that they had to sent >80% of their orders to Primex for Primex MM's to look at BEFORE sending them anywhere else, otherwise they wouldn't get to use Primex AT ALL.

    Yeah, like I'm really gonna let MM's see MY orders when I can't see theirs....woo-hoo! Where do I sign up for that? How about I just go down there instead and let them kick me in the nuts....and I don't recall ever getting price improvement via Primex, which was the whole thing that the Nat'l Assoc of Sec Douchebags said would be so fantastic about it...

    The game may have stayed fairer if ECN's resisted SM.

    I wonder why ECN's participated in SM. I mean, if you were ISLD and were the biggest venue for the naz, and your business model worked, why would you change it???????????????????

    Just my daily rant....
  3. Anyone know how ARCA will route orders once Supermontage arrives?
  4. hmap1


    "I wonder why ECN's participated in SM. I mean, if you were ISLD and were the biggest venue for the naz, and your business model worked, why would you change it???????????????????"

    I don't think they are participating in SM. They backed away after they found out about the extra fees and their merger with INCA. Also, Redi/ARCA is out as well.
  5. ILND is the symbol that being used by the soesable Island ECN. You can see it on a few stocks right now like Dell and I think INTC.
  6. Once Supermontage comes out on July 29,Soes,Supersoes,and Selectnet will cease to exist.I think Selectnet will only be available during premarket and postmarket hours,but it's a useless system,as long as you have ECN access.I think almost every ECN has been participating in SM testing,so why wouldn't they participate.It gives them access to more order flow,coming in from SM.
  7. It seems that SM is Nasdaq's attempt to address the "fragmentation problem" that NYSE traders are always so quick to point out about Nas. This "fragmentation" or multiple simultaneous markets is typically addressed in the order entry software, for instance IB "SMART" routing, which will go to wherever the liquidity is. SM, is Nasdaq internalizing this functionality, basically just an order book that includes ECNs.
    (If you can't beat em', get them into the fold..)

    Multiple markets can be a good thing, by the way, if you can find locked/crossed markets - consider it price improvement.

    I wouldn't knock the MMs. Supersoes works about as fast as ECNs, and MMs get swamped all the time by ECNs, so it's not easy to see how MMs are "manipulating" things. Many brokers offer hidden and reserve orders, so who cares if the MMs have them - we have them too. Watch out for trading against REDI on there when they have a large reserve - MMs not the only ones using reserve!
  8. I just found out from Nasdaq that with Supermontage,you can only enter market and marketable limit orders,which will trade with all MM's and ECN's.So you can only enter a buy at the offer or higher and a sell at the bid or lower.If you enter a buy lower than the offer,it will reject.If you enter a sell above the bid,it will reject.If you enter a short on a down bid,it will reject.If you get a partial fill,the rest of the order rejects.For example,the market is 20.00 x 20.01 with 1000 shares offered(no reserve).Next offer is at 20.05.If you enter a buy order less than 20.01,it rejects.If you enter an order to buy 2000 at 20.01,20.02,20.03,or 20.04,you buy 1000 at 20.01 and the other 1000 will reject.If you want to post a limit order to the book,you need an ECN,if you're not a MM.
  9. hmap1