Pros/Cons SuperSOES

Ok, what are the Pros and Cons of the new SuperSOES system?

PROS:
1) Orders up to 999,999 shares (previous maximum was 1,000 shares)
2) Applies to NNMS securities only, SOES continues to apply to Nasdaq SmallCap issues.
3) SuperSOES orders can execute against displayed and reserve size quotes. When using reserve size, a firm must display a minimum of 1,000 shares in its quote. Automatic Quote Refresh (AQR) size cannot be set to less than 1,000 shares when using reserve size.
4) 17-second interval delay between executions against the same Market Maker at the same price level reduced to ~5 seconds. Issues in the Nasdaq 100 index will be set to two-second intervals.
5) Prohibition on splitting orders eliminated.
6) SuperSOES will automatically execute against the best participant(s) in price/time sequence. The display size and potentially the reserve size, will be decremented by the size of the execution. If the display size is sufficient to execute the order, the reserve size will not be used to execute the order.
7) In instances when a firm in interval delay changes price, display size, or reserve size (whether by manual or automatic means), that firm will be deemed out of the interval delay and will be made immediately eligible for execution.

CONS???

MGB

 

The only con I know of has to do with Selectnet. Let's say you want to sell by preferencing a market maker, and that MM is bidding 500 shares. In order to make that trade, you have to decide to sell at least 600 shares (100 more than the MM is bidding.) I really don't understand why they would make this rule, unless they are trying to discourage the use of Selectnet. I can't imagine too many circumstances in which you would want to use Selectnet with this new rule change.

 

As a professional I can't use SOES so there is one for me

 

does this mean that all mm's must quote at least 1k shares at all times, cause I would think that you'll see a lot of 100 share quotes. when does this take effect.

 

This is how I read it:

When a Market Maker has a RESERVE, then it must quote a minimum of 1,000 shares at the quote.

If the Market Maker doesn't have a RESERVE, then it doesn't have to quote a minimum of 1,000 shares.

MGB