Why doesn't Island (INET) charge or rebate for listed stocks?

Discussion in 'Order Execution' started by Marc to Market, Feb 25, 2004.

  1. Straight from their website:

    Execution Fees For NYSE and AMEX Exchange Listed Stocks (Excluding AMEX ETFs):

    Free to remove liquidity from the INET book
    Free to add liquidity to the INET book


    So why would Island want to lose money on listed stocks? Are they regulated somehow by the SEC or ?

    Just curious. :)

  2. qazmax


    This is to win market share.

    Currently INCA is beating ARCA in OTC market share, but losing the listed market share battle.

  3. qazmax


    People look at the aggregate cost of doing business there.
    (Added * rebate) + (removed * fee)

    Generally speaking this is revue generated for the ECN.

    Making it free is a good deal...

  4. alanm


    Marc: It didn't work when INCA and Island did have the fee/rebate model. INCA kept the same biz it always had in listed and Island got nothing. REDIBook continued to have most of the share until it was bought by ARCA.

    ARCA then decided to make a move to take more share from the NYSE, and cut their rates by a bunch, which INCA and Island then followed. Seeing how well that worked, ARCA finally settled at the 0/0 model, and Island followed suit. INCA stuck with 0/1 until the end, but it was still a heck of a lot better than 0.5 (hundreds a month for me, and I don't trade that much).

    INET seems to be gaining some market share now, but it might be mostly from merged INCA subscribers.

    What I want to know is how can they sustain this "free" model? Do they make money from sending execution prints to the tape? How much, and how does CQS pay for that? The puny monthly exchange data fees?
  5. The markets will dry up with no rebates in the listed ecn's. Good luck.
  6. alanm


    It's been about 8 months since there have been rebates for listed (with the exception of BRUT, which has very little share). Volume on the ECNs continues to increase steadily.
  7. yea, that's why they do so much outside the ETF's? :)