Since Primex is an auction matching multiple sources as well as its own book, does IB's "Best" route see their best bid and ask, or just try to get a good fill there first and then goto another route? If they don't have the liquidity yet that process could be detrimental to good fills IMO. I wonder if they get the best price and then place a pseudo limit order with Primex to see if that best price can be improved? Here is the first part of their intro: ...is a digital trading system for stocks where brokers can expose orders to a crowd of bidders who compete anonymously for the execution. The system is designed to provide best execution and, in particular, opportunities for price improvement -- every trade, automatically. The Primex Auction gives brokers and Market Makers the means to expose their orders to the broadest possible audience -- an electronic crowd of competing broker/dealers, proprietary traders, institutions, ECNs and even the orders of other customers. The Primex Auction combines the best elements of today's exchange and dealer-based securities markets. By auctioning securities, the system ensures that orders are fairly priced, based on market forces. Electronic links encourage broad participation, enhancing system liquidity.
I read the primex website and I'm still not really sure how it actually works. Can someone give a good explanation? The explanation on the website was very cryptic.
I made the mistake of trying to get a straight answer from that place also. SKETCHY!!! Level 2 windows on ensign windows are currently fucked up and don't refresh properly, so I have been unable to precisely watch how my fills have been through IB, but the ones through primex were not out of line with what I expected at the time. It seems as though PRIMEX (sounds like the COSTCO of the markets - why not just call it COSTEX??? CHEAPEX??? NEVER-NEVEREX???) is its own market besides the naz, and what makes it sketchy is the fact that it does not appear on the L2 screen. It kind of seems like Arca, only sketchier and with 100% hidden orders that won't execute outside of the NBBO. Check these excerpts out: "Members of the bidding crowd participate anonymously, bidding at prices within the parameters of the NBBO. Competing interests in the crowd always have the first opportunity to interact with orders entered into the system, which include order flow from Market Makers not previously exposed to the market at large. " Brilliant....thanks to the geniuses at PRIMEX, the world now has an open market....plus thanks to PRIMEX, us day traders now have access to the "hidden" MM's....you know, the secret ones... "Retail investors benefit by having their orders exposed to The Primex Auction's broad audience of bidders, whose competition creates increased opportunities for price improvement and enhanced liquidity. Because the retail customer's broker exposes the order on behalf of their client, the benefits of the existing relationship are preserved." Thanks to PRIMEX, the volume of the naz is going to increase to provide all of this extra liquidity. "The auction process has been designed to ensure the fastest, most efficient trading environment possible. The Primex Auction provides bidding participants with unique ways of pre-registering their bidding interest to more quickly interact with orders being auctioned. In this way, orders can automatically, even instantaneously, seek out price improvement opportunities in almost any market situation." ...straight from the mouths of the inventors of modern markets....amazing....how did Island and Arca and all the others survive so long without Primex to lead the way???? Did SL4CEO start working for primex??? There are no straight answers on this page about how their auctioning actually works. I'm sure it's an interesting idea, but what's the point? Plus it's pretty fucked up that IB has not given its customers any notice of the change in routing. It wouldn't matter if it was just another ECN, but this...this is something different... Maybe I'm being too critical, but the whole primex thing begs explaining.
not sure what the problem is of offering another route that provides electronic executions for markets as long as you get the best price. you are not obligated to route there. i'll find out more about it and post. It is not a fly by night exchange as the backers of primex are: bernard madoff, goldman, merrill, morgan stanely, and salomon.
My main concern with Primex is that I don't know how it works and there is absolutely no transparency. Its one big black box.
def, The problem (from what I saw today) is that PRIMEX is a big step backwards. The only trades I got executed on PRIMEX today were to the advantage of the counter-party. When the market was moving against me, PRIMEX would back away, and then BEST would have to re-route to ISLAND or another ECN. Since BEST-ECN also uses PRIMEX, the only way to avoid it is to manually route each order. It is just like trading was when the MM could take a certain number of seconds to decide to execute or back away. If BEST got the executions on PRIMEX, it would be okay, but I had five executions on PRIMEX today, and probably twice as many orders that had to be re-routed because PRIMEX backed away. It didn't work like an ECN or SUPERSOES - it seemed like a MM was deciding if he wanted to fill my orders or not. It wasn't good.
I noticed that some fills on BEST_ECN were sluggish today; I can't conclusively say whether it has anything to do with PRIMEX, but I will watch more closely tomorrow. In reviewing my executions through BEST and BEST_ECN, I had a number of them filled by PRIMEX. Reading the about page on PRIMEX ( http://www.primextrading.com/about/primex/ ) does not give me a warm and fuzzy feeling like when I read island's about page ( http://www.island.com/about/index.htm ). It sounds like the MMs (GSCO, MSCO, etc.) want some of the growing ECN pie (see presss release ISLAND TOPS LIST AS LARGEST ECN, REPORTS NASD http://www.island.com/pressroom/releases/010902.htm ) "... Islandâs share volume grew by 28.4% between September and November 2001 â making Island the fastest growing ECN. By comparison, ... Instinet's share volume registered a negative growth â16.2%. " I find it very alarming that IB would turn on this PRIMEX route before notifying any customers of this change. If you read up on PRIMEX, it doesn't sound like a regular ECN; [From PRIMEX about page] "Executions in this hybrid auction/dealer system would be based on independent market forces and, importantly, preserve the proven efficiency of the Market Maker business model." Anybody have an independent 3rd party article describing how this PRIMEX exchange compares to other ECNs? Fleance
i rec'd some pretty quick feedback about primex and was told the benefit would be that the route could offer some price improvement. if you find that you are getting worse fills (please give it more than a few days of experience) then send a note to ibmgmt with as specific an explanation possible. it was added in the hopes to improve fills, if you are finding that is not the case, perhaps it could be excluded from the best route.
Here is a detailed explanation of how it works: http://www.nasdaqtrader.com/trader/hottopics/primex/pmx_syst_desc.pdf Sounds like the primary objective of the Primex exchange is to offer price improvement over the NBBO. Bids or Offers that offer the most price improvement have priority to match with incoming orders. There is a 0, 15 or 30 second setting that an order is given to see if it is filled, but could be instantaneous if there's a match. In theory how often will an independent market such as Primex have a superior bid/offer than the NBBO? If it doesn't there's a delay in your order, and if it does you get price improvement. Why don't they just compete directly on the public tape like an ECN, and publish their best prices? Wouldn't that be price improvement to a participant if their best price was better than the NBBO?