Chris,
So why are these types of situations allowed? They do not create a fair and orderly market IMO. If the payment for orderflow MMers accept the order flow from one broker, IMO they should be required to have the same auto-ex setting for all of the brokers they accept orderflow.
If fairness is the real issue, a case can be made for elimination of all auto-execution practices. When a MM auto-executes an order at a price that is "better" than his own quote, matching the better quote posted elsewhere, s/he is often in effect stepping in front of an existing limit order that just might be mine (or yours). The ultimate "fairness", in my opinion, is that the first to the table with a best quotes should be the first to get filled. But then, no-one said life, or the Nasdaq, was fair.
An added observation about MMs regulating who they will auto-execute, and who they will not. My broker (Interactive Brokers) within the last few months had two separate arrangements with Herzog and Sherwood that included auto-execution. It was nice while it lasted, for not much more than a week in either case. I'd settle for even 100 shares if I could get it at my current fees.
Dan |
