I know this is the Canadian Day trading thread but I now people still follow U.S stocks and are interested in U.S trading. This is one of the best explainations between the different trading systems on the NASDAQ taken from the remotetrader site. It kind of boggles the mind.
ISLAND
Island is an ECN which allows the trader the ability to act directly as a market maker.
Island orders are visible as "ISLD" in the market, and may be entered at any price. However, only the best Island order will be visible in the market.
Island orders are bids and asks rather than buys or sells.
a. An Island bid is an order to buy stock which will appear on the bid in the market.
b. An Island ask is an offer to sell stock which will appear on the offer.
Island orders are broadcast to both market makers and to other traders in the system.
An Island order will only be filled if another "Island trader" or market maker chooses to trade at that price.
SELECTNET
Selectnet allows traders to negotiate prices through NASDAQ. This give traders the ability to enter an order in-between the quoted prices and to potentially fill the order.
Selectnet orders are only broadcast to market makers.
Selectnet orders do not afford limit order protection to the trader entering the order.
A Selectnet order will only be filled if a market maker chooses to trade at that price.
Selectnet orders may be displayed to all market makers, or may be displayed to a specific market maker through "preferencing." Preferencing is used when a trader, who either is not eligible to use SOES or does not want to use SOES, would like to trade at the quoted price of a particular market maker.
a. A preference order is only visible to the market maker to which it is sent.
b. If a trader preferences a market maker, then that market maker is obligated to fill at least part of the order.
c. However, if the market maker can demonstrate that he or she just filled an order at that price (perhaps a SOES order), and was in the process of updating the quote, then he or she is not obligated to fill the order.
Selectnet does allow a trader to buy on the bid and sell on the offer, thus acting like a market maker.
Selectnet orders may be placed at any price with any number of shares.
SOES
SOES allows the individual to electronically trade NASDAQ stocks with institutions that are currently advertising to buy or sell these securities at specified prices.
SOES trades are executed in lots up to but not in excess of 1,000 shares. For stocks that trade with very low volume, a SOES trader may be limited to as little as 200 shares per SOES execution.
A trader who buys 1,000 shares of stock using SOES must wait 5 minutes before he is allowed via the SOES system to purchase that same stock again. This time restriction does not prohibit the trader from buying that same stock through other ECN's.
SOES trading is a mandatory execution system. This means that a market maker who is advertising to buy or sell a stock must trade at least the amount he or she is advertising.
Once a market maker has filled an order at its advertised price, he/she has the option of refreshing the number of shares at that price or changing their price.
SOES is on a first come, first serve basis.
Only true market makers are "SOESable". ECN's do not fill orders on SOES.
INSTINET(INCA)
Instinet is a trading network that allows daytraders to transact directly with other broker-dealers and institutions. It is a service provided by Reuters Holdings OLC. This service enables subscribers to trade electronically with anonymity. Subscribers submit buy/sell orders, which are then matched by the Instinet Corporation.
SUPERDOT
Superdot is a means of electronically accessing stocks on the NYSE.
Superdot is an electronic order delivery system that links member firms directly to specialists who can rapidly execute their orders and send them a report. The specialists then manually pair up orders, fill the orders from their inventory, or place the orders on their limit order book. The limit order book allows the specialists to organize the orders to help them establish a market and to execute these orders when the orders become marketable.
Superdot gives individual investor orders of less than 2,100 shares priority over all larger institutional orders and allows brokerage firms to offer their customers online access to stocks traded on exchanges. |
