New Nasdaq Fees (Echo vs. Bright)

Just saw the (new) Echo fee schedule on their site. They charge the ECN fees, but say on their site that the "direct access" to the ECNs is superior. They even point out that firms that do not charge the ECN fees (Implying Bright here I think), suffer from slower executions because they try to match against their own book first (REDIPlus trying to match to REDI first?)

Can anyone, from their personal experience, confirm/deny this?
Basically, if ISLD is on the bid and I'm selling, do I have to wait (more than 1 sec. = bad, more than 5 sec. = very bad), while RediPlus tries to match with the REDI ECN?

Also, Echo offers a .001 rebate for adding liquidity. Sounds Interesting. They claim this is a "profit center" for many of their traders. Anyone from Echo have any insights on this?

 

With rebate I get back from Island I'm now offering out on Island instead of my usual NY as I peel off some of my positions.
Robert Tharp

 

All ECN's try to match their own book. This is good for them AND you. They look at the market for the best price. If they can find an equal or better price on their own ECN, they'll fill it there because it's cheaper for them AND faster for you. This is true for ARCA, ISLD, REDI.

So, regardless of your execution software on the front end. If you put your order out on ISLD, it will look at ISLD and if they find the best price there, that's where it will be executed. Same for ARCA and same for REDI. Any ECN that did otherwise would not get much business. With RediPlus, you can specify which ECN you want to put your order on. You can do this with each individual trade or for all OTC stocks.

The downside of going to an outside ECN is the "Ships Passing in the Night Scenario". Let's say that you put your order on ARCA, it reads the market and sees that ISLD has the best bid so it hits it. In the milliseconds (10-20) it takes for your order to get there, someone on ISLD who pushed the button at the same time gets the stock. You are rejected and the process starts again. But if you were hitting the bid on ARCA, you wouldn't have the delay involved in transmitting the order because it's right there. Now let's say you are the guy on ISLD and ARCA has the best bid, well then you'd still be in the same boat and have to transmit to ARCA so someone on ARCA could pop in and get it before you do. So, it depends on what ECN you put your order out.

As a disclaimer, this is the way I understand it to be. But technology changes all the time, so I'm not saying it's gospel.

 

I've been using ISLD and Redi with Bright for the QQQ and the SPY for quite a while, and have never noticed any execution speed issues on any of them.
ISLD executions are instantaneous so are REDI executions.

On a side note, Bright charges an extra fee for Level II, without it as far as I know you won't be able to see ISLD on listed stocks.

One more thing, pay extra attention to the people that play ECN games on listed stocks, they tend to park their bids and offers, a dollar away from the NYSE quote with the same decimals, lets NYSE at 38.69 and ISLD at 39.69, at first glance they tend to look the same, and sometimes when you are in hurry, you might accidentally hit them, and it hurts.
Last year I hit a 500 Ask on ISLD a buck above the Nyse ask, at least now I know where the bad prints come from...

RandomWalker

 

Magna - That's true, I would route directly to ISLD in that case, however I am assuming that Bright does not have a direct link to ISLD, or others such as INCA, since they do not charge the ECN fees.

This from Echo's site:
>>
Often times firms that offer no ECN fees do not have direct routing to the ECNs, but rather route through a third party or a different ECN first, looking for an order match, then to the prospective ECN. This takes time, sometimes many seconds, and a slow order in a moving stock can be costly.
>>

Really, many seconds? I suppose paying the ECN fees would be worth it if this is the case.

 

You don't need to pay for NASDAQ L2 to see ISLD on either listed or OTC stocks.

 

It seems to me that ECHO trade is trying to match www.pointdirex.com fees schedule, which pointdirex already has. I dont have much experience with echo trade, but i dont see it have access to many of the ecn's. Also i dont know about the experience of the software either, as far as speed and reliaibilty. i just switched to pointdirex and am very happy with them.
just my 2cents.

thanks
hans

 

extra fee for level 2?
that sounds crazy to me. which I think is why Bright never was appealing to me. There always seems to be some additional fee on everything...which confirms what I heard in the first place about the Echo's breaking away from Bright...they were tired of getting nickel and dimed everywhere.
Reminds me of a local bank up here in Albany...They've got a 20foot sign that says "Totally Free checking" .so I signed up...the first month I had about $15 in fees. I'll never do business with that bank, ever again.
uptik2000

 

I have seen this game also, not just on listed but on thinner nazdaq's. Gotta pay attention.