Major News - Redi & Arca

Discussion in 'Trading' started by Don Bright, Nov 29, 2001.

  1. hey! im an anyone!!

    Soes is dead.. think of Supersoes as a new ecn for market makers.. Pro firms were not allowed to use Soes in the past so thats probably why there was confusion.. alot of software venders didnt change the name SOES to SUPERSOES on their order entry programs.. and if you didnt know that, then you would not have chosen SOES due to regulations against it.. so i assume you were using Snet thinking it was SS.. thats why the long fills..

    The nasdaq market has a whole new feel now that we have instant executions.. market makers cant hide behind delayed quotes.. and they think twice before they try to "crank" a stock by posting fake size.. once you give it a try i feel confident you will upgrade the nasdaq from what you call a "roach motel" to at least a Motel 6 =)..

    also, i want to follow up on something that Turok posted..

    i want to give an example of why arca is slower than redi based on the way that i understand the logic to work.. suppose this is the market in QLGC

    MSCO 43.30 2 GSCO 43.33 1
    LEHM 43.30 1 FBCO 43.33 4
    ISLD 43.30 5 INCA 43.33 2

    back in the days of selectnet, REDI was a much better route than ARCA because ARCA only targeted MM's for their displayed size while REDI would send an order for the total number of shares needed regardless of the size being displayed.. enter the days of Supersoes.. here is why REDI logic is still superior.. when a market maker has a reserve size under supersoes he is required to make an initial display of at least 1000 shares.. (there is a plan in the works to end this).. but when he fills an order, his quote is decremented by the number of shares that he fills.. so, its not possible to tell just by looking at the number of shares posted by a market maker if he is likely to have a reserve or not unless you saw the initial quote.. lets look at the example with arca and redi using supersoes.. say you want to buy 1000 shares at the inside ask..

    ARCA scoops the 200 shares displayed by INCA.. then it routes an order for 500 shares to Supersoes.. the remaining 300 shares are placed on ARCAs internal book.. but lets suppose that FBCO has a reserve.. ARCA then has to cancel the order sent to its internal book and re-send an order through Supersoes for the balance..

    REDI scoops the 200 shares from INCA.. then it routes an order for the full 800 shares to Supersoes which is filled immediately since one of the market makers has a reserve..

    obviously REDI is much faster in this example.. and the worst that can happen with REDI is that the MM doesnt have a reserve in which case the balance posts to REDI's internal book..

    i hope when ARCA and REDI merge that they adopt REDI's logic..

    anyway.. enough rambling..


    damn man.. remind me not to piss you off.. what do you have a database to remind you of this stuff.. =)

    btw, i really enjoyed reading "The Stock Trader".. and i am looking forward to your new one.. and i really mean that.. im not just kissing up to stay out of your database!! =)

    #41     Dec 2, 2001
  2. TonyOz



    ">>>>You are absolutely right about that night in Texas. And if you recall, I immediately went up to John and apologized for being out of line in my questions to him (I surely should not have picked that open forum to discuss his own trading). You recall that this happened after a whole day of listening to a whole lot of nonsense from so many people (and when combined with nearly zero attendance from the public), which sometimes takes it toll on my psyche'. "

    I personally did not have a problem with your questions, but I do agree that it was not the proper place to ask them. The only reason I brought it up was to show that professionals in our industry are exposed to criticism from they peers. And in a way I was validating the following criticism I had of you.

    However, I only did so, because I totally respect the way you have handled criticism on this board, and you do not hide. I like that about you. As to Dallas, hey, we all get out of line sometime, I've made the same mistake more than once myself :)

    In short, my criticism was not actually constructed to belittle you. My intention was to point you to a good source of information that many of the traders in your firm can benefit from. And, I thought the original post on this thread had some promise to the way Bright Trading will embrace Nasdaq trading in the future. In any case, I think you have handled my post in a classy way, and please check out the course offered on that site. The guy who put it together posts on this forum, so you may ask him more about it.

    >>>.I sincerely appreciate your advice and suggestions. I have been told that come February, major changes are happening all over again (super montage, and exchange status for arca/redi), so it seems to me that we must all be vigilant in our task to stay completely current.

    Absolutely! Let's help each other here and learn from each other. It is much cheaper that way! :)


    >>>>damn man.. remind me not to piss you off.. what do you have a database to remind you of this stuff.. =)

    btw, i really enjoyed reading "The Stock Trader".. and i am looking forward to your new one.. and i really mean that.. im not just kissing up to stay out of your database!! =)

    LOL, Unfortunately, the hard drive that all this data is stored on is getting old and is not working as well as it used to. Long gone are the days when I would make 50+ Trades per day and remember all my trades a few months later.

    I'm glad that you like the book. Long gone are the days when MRVC was 100+ too :) I have a confession to make. I pick up the book about once a month and read through some of the trades and shake my had from side to side. The reason is that in my wildest dreams I did not expect the prices of those stocks to go down as much as 95%. It is just unbelievable to me.

    And do you know what is more unbelievable? I receive so much crap in my mail box accusing me of being a salesman and not a trader. Here is an example:

    "In your first book, you talked about how you wanted to become a stockbroker until you found out they are just salesman. Well, it sounds like you have turned into what you were trying to avoid. You make 20K + in one month, take off a year to write a book and you call yourself a trader. All you are is just a salesman selling a service. If you are so dictated to realtick, why the ^*&%$ do you have to charge $20 a moth for a scanner that is based on pure volume. It seems the only people who are truly making consistent money in trading are the ones who hide behind the trader status and try to tell the public what to do based on past charts. Do you really still trade CMGI. hello, the stock is at $2."

    To set the record straight for all those who wonder about me being a trader, I would say this: Click the attachment.

    And no, I don't trade CMGI :)

    And at $20 a month for the scanner, I'm getting a bargain. I would have to pay more than 15K a month to run this scan and get the results as fast as RealTick gets them to me. And BTW, all my trades last week, each and everyone of them came from the scan.
    #42     Dec 2, 2001
  3. TonyOz


    The attachemt is for 11/29/2001.
    #43     Dec 2, 2001
  4. GHJ


    Hi Tony,
    You may have stated this before but what broker is this attachment from? Is this your typical daily share volume and number of trades? Thanks.
    #44     Dec 2, 2001
  5. cashonly

    cashonly Bright Trading, LLC

    According to the conference call with the announcement of the merger they said they will be using the RediBook technology, but the ECN will be called ARCA.
    #45     Dec 2, 2001

  6. Just a correction, but based on the third quarter, Instinet and Island both lead the combined "Archipelago & REDIbook" matched share volume. The following is a quote from

    "In the third quarter, J.P. Morgan Chase reported that Instinet's single-counted matched share volume was 1.3 billion, followed by privately held Island with 8.9 billion. Archipelago and REDIbook trailed with only 7 billion combined."

    Oh, the above "...1.3 billion..." is a typo, I checked, and the actual volume was 13.0 billion for Nasdaq listed Instinet volume in the 3rd Quarter.

    Another interesting quote from the same article:

    "Archipelago and REDIbook double-count trades matched. For example, if a trader buys 1,000 shares from a trader selling 1,000 shares, it's counted as a 2,000-share trade. Meanwhile, Instinet would call it 1,000 shares."

    Here's a link to the article:

    Looking through other news articles I have found the following (just confirming cashonly's above post)

    "In the coming months, the Redi platform will likely be the primary Nasdaq matching mechanism, while the ArcaEx platform will likely be used primarily for matching exchange listed stocks."

    Here's a link to this article:
    #46     Dec 2, 2001
  7. ARCA/REDI quoted market share pecentage in the WSJ. And since we use Redi to acccess ISLD, INCA , and all the other ECN's then you are actually saying that we have a bigger number of shares being executed.

    I am sure the distinction is that Redi+ is a trading platform as well as an ECN, and that, when combined with ARCA, their totals should be a bit bigger based on past performance.

    Thanks for the article, I will read it now.
    #47     Dec 2, 2001
  8. I, too, think that your input has been great, and that we all need to help one another when we can (without all the "chest beating" like a bunch of damn it sometimes appears).

    How is it that you can quote in your posts better than I can...?? I cut and paste, is there a function on this board that makes for automatic "between the lines" or "quoting" from other posts (I may have missed it).

    Thanks again!!!

    also, check your personal email...
    #48     Dec 2, 2001
  9. Don, on every post in the lower right hand corner there is a "quote" link, selecting it will automatically format the whole post (in a quote format) by that individual. Then you can take out (edit) whatever text you don't want and post your reply underneath.

    There is also an "Edit" and "Kill" option on every post, which you can use to edit or kill your own post with =)
    #49     Dec 2, 2001
  10. I opened the attachment and saw the number of trades (40), but was unable to "click on date to see trades" I supposed to be able to do that?

    Am I missing something here?? If you want us to see some trades then I great...I just don't seem to be able to open them for some reason.
    #50     Dec 2, 2001