Yes Steve, it was a good scam. Breaking news on a stock, the specialist freezes the book 1x1 and ecn's are crossing it up 50 cents. You could hit the specialist's 'frozen' 1 lot offer for 99 shares as fast as you could hit the key and immediately get out on the ecns. The odd lot trades were filled electronically, instantly and didn't show up on the tape. As free as free money gets. Obviously the specialist firms weren't fond of it.
lescor... Thanks for your informed posts. Lot's of nonsense on ET as you know but I continue to hang around and read threads because of smart people like yourself. Regards, Joe
Interesting what you say, lescor and Steve Tvardek: thanks for the insights. I still don't understand why IB would turn off all odd lot trading though. It seems like they ought to be able to auto-route all odd lot orders to ECNs in such a case, just bypassing the specialist. Stopping all trading in odd lots is clearly going to be a bad thing for small active accounts, for which I actually think IB offers some real advantages over the alternatives. Someone said it already but I think it was a good point: $50k for 1 lot of GOOG is a bit stiff for a trader with say, a $20K account. In fact, someone ought to do something about BRK-A while they're at it. Maybe trading in units of 1/100 of a share should be allowed
According to IB's website, listed (NYSE, Amex, ETF's) odd lot orders routed thru Arca are charged 3 cents a share. This probably results in losses to IB, hence this new policy. It seems the exchanges are getting too much pricing power and the brokers are just trying to pass on the costs, especially if it's unprofitable to begin with. Exchange monopolies, any monopoly for that matter, is not good for customers.
But IB has prohibited initiation of odd lot positions on ARCA for some time now. I don't have a problem with this given the way ARCA charges for odd lot orders. The question is, why is it suddenly not possible to initiate an odd lot position on INET? I just checked and I can submit an odd lot initiation order on INET this morning via IB. So as a previous poster said, this appears to be just an experiment by IB at the moment for something more permanent in February 2007. It would be nice to have a warning before they start dicking with the order routing logic.
i've noticed for a long time arca won't take odd lot trades in pre market are after market but inet will and only limit not market. so can anyone sum up all the rules for odd lots? like now sdot won't take odd lots. what are the odd lot rules and fee's for inet and arca? what are the fee's for both and are the fee's different for market or limit?
It is for all types of initiating orders. So assuming you have >= 0 shares of a stock, you wouldn't be able to buy 1-99 shares of that stock with an order.
steve, lescor suppose I send 5 odd lot orders (for example 5 x 98 shares = total 490 shares) to amex specialist. Is this accepted by Amex. If not what will be the procedure. I know that through some software platforms (not through IB) it's possible to send these type of orders, and some brokers charge extra fees for this possibility. So that would mean that some brokers accept it. What's your opinion. By the way thanks for your posts.