So what order should I be sending my option orders in? I currently send to Ise first, then PSE, CBOE, PHLX, Amex if ISE not available. I use PSE second as it is quick to cancel. Will ABP from CBOE and the PHLX system let you cancel orders as quickly as ISE and PSE?
ABP will not allow quicker cancels at the CBOE but cancels at the CBOE are generally instant as long as your already in the customer order book. The problem is it can take several minutes to get on the book at the CBOE if you are IMPROVING the market. As a test - if you get on THEIR market, you will see that your limit order displays immediately and you can cancel immediately. We shall see about the PHLX. But they both have this technology (the INSTANT display/cancel of orders) and I expect it to be introduced at some point. The PSE is a good second choice, it has always allowed customer order match and allows a quick cancel once in the book and an immediate display of your order (as long as the market isn't locked/crossed). The AMEX is potentially the problem. The ironic thing about the AMEX is they publicly stated a couple years back that they would improve their auto-x system so that all markets would be honored with auto executions (not including locked/crossed markets). They constantly keep pushing back the project but I would be shocked to see them involved in any linkage without an improved auto-x system. My guess is that auto executions will be available for all markets (when not locked/crossed) at all five Exchanges (plus the BOX) in less than a year. We should also see the INSTANT display and cancel of limit orders too. Locked/crossed markets are another issue and you will see the more agressive Exchanges also honoring these quotes. It will get better........................
I think were on the same page here. It is important to know the rules, and where the orders should be going. Customers will probably get good fills, I don't doubt that....I just hope that they keep some good, healthy competition within the industry. Don
I will stick with ISE and PSE then. I can get just about everything I want done with those two exchanges.
I believe the ISE is the same as all other Exchanges. Their members own the Exchange. I believe the current chairman Bill Porter, is also the founder. Thier seats are in high demand (unlike the other Exchanges) with a CMM seat (not a PMM) going for $1.6 mil recently. How does that compare to a MM seat on the PSE offered at $40,000??? what does it tell you?????? Justice!
It sounds like the BOX may not be owned by the members and have no need to be. Liffe is now owned by Euronext and you can get direct exchange access without owning a seat or shares. If every broker/dealer can make a market without owning a membership then the BOX markets should be liquid. Though some broker/dealers may want to stay with the ISE to protect their investment.
You're absolutely correct...the "edge" is gone for even the floor traders in options. I have many friends on options floorrs...and they're making the transition to equities, but I actually feel kind of bad about it. Just like when they closed the PSE equities floor. Don
just21, in regards to routing you're probably better off using BEST as the algorithm should have a better idea of who/what is providing electronic fills. Alternatively, if you trade a few names, then do the research. See which firms are the primary market makers in the options you trade and route accordingly. The difficult part is keeping abreast of they myriad of routing details on the various exchange. As of members of ISE not particpating on BOX. I can't speak for the other firms but one of the top market makers on the ISE is the initiator of BOX. The ISE gives preference to primary market makers which is not a perfect system.