SuperSOES Update

Discussion in 'Trading' started by Tradewinds, Nov 5, 2000.

  1. SuperSOES update

    Head Trader Alert #2000-83 - November 3, 2000
    SuperSoes/SelectNet Will Be Implemented on December 11, 2000; New SuperSoes/SelectNet Pricing Approved

    As originally announced in August, Nasdaq® has made several changes to the SuperSoesSM system. In order to implement properly, these changes have required additional testing time. Therefore, Nasdaq has rescheduled the implementation of SuperSoes and the modifications to SelectNet® for Monday, December 11, 2000.

    The implementation, which was previously scheduled for November 20, 2000, will include the following additional features:

    The allowable size of SuperSoes orders has been expanded to 999,999 shares;
    An order reference number has been added to Small Order Execution SystemSM (SOESSM) Order Entry, Execution and Scan messages;
    Multiple timers have been created so the interval delay between executions may be set to different times for different sets of securities (e.g., initially, the Nasdaq-100® securities will be set to a two-second interval and all other Nasdaq National Market® securities will be at five seconds);
    Multiple copies of the SOES application have been created for additional capacity; and
    Internal processes have been modified to improve capacity.
    This implementation will re-establish SelectNet as a non-liability system for purposes of order delivery and negotiation, and establish SuperSoes as the primary order routing and automatic execution system for Nasdaq National Market® (NNM) securities only. Processing of Nasdaq SmallCap MarketSM securities is unchanged.
    The implementation date of December 11, 2000, is dependent upon the successful completion of user testing. The new Saturday production test dates are:

    November 18, 2000
    December 2, 2000

  2. SuperSOES delayed again until 1/22/01!

    Head Trader Alert #2000-95 - December 4, 2000
    SuperSoes Implementation Postponed Until January 22, 2001
    (Alert #2000-95)

    Following the third user acceptance test this past Saturday involving more than 200 market participant firms, and after careful consideration and close consultation with market participants, Nasdaq® has decided to postpone SuperSoesSM implementation until Monday, January 22, 2001. There will be Saturday user tests on December 30, 2000, and January 6, 2001. API/CTCI (CST) testing will continue to be available six days a week, Monday through Saturday.

    Successful implementation requires not only that Nasdaq systems function successfully, but that vendor, Market Maker, and ECN systems be updated to accommodate and reflect the new Nasdaq functionality. It is also imperative that market participants be prepared for trading in the new environment. While we are pleased that Nasdaq systems performed as designed, we are aware that the design requires substantial adjustments to our users’ systems, many of which have not yet been completed. The additional time will allow market participants and vendors to continue fine-tuning their systems, and allow market participants to become more comfortable with the changes in trading practice.

    I contacted the Nasdaq and so far, NO ECNs have applied to be part of the new system, so ECNs will still NOT be Soesable. The only ECN that has indicated interest is ARCA.
  3. mjt


    I read a couple articles on this. Supposedly there are a couple problems ECNs have with the new system. The first one has to do with ECN fees. I guess that ECN quotes will have to get in line behind market makers' quotes because the ECN fees will be considered part of the quote. So if market makers are asking $15, an ECN asking $15 might actually be considered to be asking $15.05, for example, if the ECN fee is $.05/share. I don't understand why it has to be that way, though. Sounds like something the market makers cooked up.

    The other reason makes even less sense to me, so I'll just post the quote from the magazine (Active Trader Nov 2000):

    "Let's say an ECN is signed up for auto-execution, and it has the best bid in the Nasdaq Level II quote montage. Suppose a trader using a direct-access broker sells to that bid, using the ECN directly and bypassing the Nasdaq. Let's also say that fractions of a second later, the Nasdaq receives an order that would hit the bid, and presents the ECN with the report of an execution. Keep in mind that market participants who have agreed to auto-execution are responsible for all executions received. So, these two almost-simultaneous orders have effectively created a dual liability for the ECN.
    When the ECN received its order from the direct-access broker, it sent an order to the Nasdaq to remove its bid. The order was sent at light speed and processed instantly by the most advanced computer system in the world--but it was still too late. The ECN now has bought the stock from two different parties, and it is liable for both orders. It has an erroneous, but real, proprietary position."

    I don't know why they can't set it up so that orders are placed without regard to route. You would indicate market or limit, the price if it's a limit order, and quantity. Then the system itself would determine whether the best price is through ISLD, REDI, market maker or whatever. Why is this such a hard concept?
  4. davealex


    Let me post something I also posted on SI when someone joked that with all the delays, SuperSOES is probably just a myth.

    Unfortunately, I think it will actually arrive, but will be accepted like the Edsel.

    Why was the Edsel a flop? The lead time to design and build a car is several years, and the Edsel project was started several years before it hit the streets.

    The project started when flash and chrome and horsepower was all the rage. By the time it was introduced, America was in a recession. Car sales for all makes were falling dramatically and people were shopping for more economical cars. It was a bad time to introduce a new marque, and an even worse time to introduce a large car.

    You make the connections. Do traders want a better SOES? Not the ones I know. Most traders I know want what amounts to a full-blown ECN with no humans and with market makers trading just as we do. Does that sound even close to what we are going to get?

    I give it three years before it collapses under its own weight as the ECNs get stronger and stronger, IMO.

  5. SuperSOES, the system that wasn't......

    Head Trader Alert #2001-09 - January 16, 2001
    SuperSoes Implementation Delayed
    (Alert #2001-09)
    As you are aware, Nasdaq® held an industry-wide SuperSoesSM test this weekend. While the test again demonstrated that the SuperSoes design is sound, issues arose with respect to the operation of the test, particularly at the opening. In addition, there continue to be unresolved questions with respect to the operation of vendors and numerous firms’ interfaces with the SuperSoes system. Based on these results and general industry feedback, we will not introduce SuperSoes on January 22, 2001.

    This disappointing conclusion has been reached despite concerted efforts by Nasdaq market participants, by market vendors, and by Nasdaq staff. We remain committed to the SuperSoes approach as an important evolutionary step toward SuperMontageSM. We are, however, reassessing the launch schedule and targeting a post-decimal timeframe for implementation. Nasdaq will use the additional time for continued communication and training and for the development of additional functionality.