I've traded NYSE extensively through various brokers...I'm wondering if anybody has experience with NYSE order execution through Datek. I don't like Datek for any reason except that they apparently allow you to place an order for any number of shares at $10.99. In particluar, does the full NYSE order as entered go directly to the specialist's order book, or does Datek play games with the order flow (like scalping 4/10 of a cent as some have alleged they do with Island)? Are the orders entered and cancelled as quickly as other brokers? Thanks!
To answer your question, yes, I do have the experience. Market orders, if entered well before the open, are processed well. Orders during the day, on the other hand, are generally risky. Your fill price can be substantially different from the price they quote you. Because of slow executions. 80% due to the Specialist, and 20% due to Datek. And that can get especially messy, if the market in your particular security starts moving up or down very fast. And then "market orders on close" or orders placed just before the close can be nasty too, 80% due to the Specialist, 20% due to Datek. For example, the former can sometimes cancel or fail to fill your order, even if it looks like a valid one. Datek is beginning to look good to me, too. On Gomez.com Datek is the nation's #2 discount broker for hyperactive traders like me. And that's without Apex. Also, when you buy 20,000 shares @ $25 (i.e. when you make a $500,000 purchase), your commission is only $10.95. When selling, don't forget the SEC fee, which can be more than your commission.
As to scalping, I suspect some of it is going on but personally I've never taken the time and trouble to monitor the specialist's book just to discover evidence of scalping. As to order cancellations, Datek makes it pretty easy to cancel an order, any order, at any time, if it's a limit order. Right after you hit "cancel", on your "daily activities" page you get a the following message "trying to cancel". It is instantanious. Translation: "We've just cancelled your order. See how fast we've done it?" However, if you really, REALLY want to be on the safe side -- and you should be -- it's always prudent and expected of you that you get the cancellation verified verbally by your broker. If he says "you're out", then you are. If you call none or if they say something different, then you can get an unexpected surprise. Usually not. Only sometimes. Only in a blue moon.
One of my friend trade using Datek. On NYSE stock, it route its buy or sale order through ISLD. On number of occasion, I personally witnessed that they scaled 4/10 of cent for their profit. For example, my friend bid 34.45 for 5000 share with a limit order. On level II with three decimal accuracy, I saw a bid for 3.446 for 5000 on ISLD. Meanwhile my friend is charged 34.45 on his statement. Many level II only shows two decimal point. So this is misleading as far as commission is concerned. But $10.99 or $9.99 commission(for large volume trader) is so tempting.
Thanks...that's what I wanted to know. I haven't looked at Datek for years because of the reasons you stated above. The low commissions are deceptive because the orders get routed to an exchange (Island) without liquidity for nyse (except for the highest vol. stocks like GE or C).
True. Buyer beware. If you ask them about their "auto routing" they tell you it is "proprietary". 'Proprietary' means privately owned and managed. Instead of saying 'sorry we can't tell you, this info is private', they throw in an unusual word -- "proprietary" -- hoping none knows what the 5-syllable word means. What they really mean to say is that A) we get kickbacks, B) our judgement is clouded, C) we prefer not to give you the exact details on how our judgement was clouded, and D) you have no right to know where your order is sent. Some say this kind of secrecy is ourageous, and I have to agree. True, you can select other routing options, but if you ask your broker, they will discourage everything other than the secretive auto routing option. To make things worse, they fail to tell you 'where' your order was sent/executed. True, they tell you about it one day after the event, but by that time it's too late because by that time "time & sales" information from major ECNs is no longer available. If you select "auto routing" I suspect the vast majority of your orders are sent to ECNs like ISLD or TRIM. This means your NYSE order frequently gets routed to an exchange without liquidity. There is money in it for the broker because brokers often get kickbacks from ECNs. But this is a poor deal for buyers/sellers of NYSE stocks (except for high volume stocks like GE or C). Buyer beware.