I believe those ISLD orders are also presented to the NASDAQ system SOES+Selectnet as a broadcast... there is a slight delay b4 it leaves ISLD and goes out to NASDAQ though, to prevent double-fills. So, ISLD is not really an "Island"! If a Selectnet or SOES order is matched on NASDAQ, you are filled there.
This post may be a bit misleading. ISLD order can only be filled in three ways:
1) Your incoming ISLD (buy) order matches or crosses an existing (sell) order on the ISLD book. Otherwise, your order is added to the ISLD book and may also be sent for posting on Nasdaq, assuming your order is the best ISLD bid price in the stock (and the order is for 100 + shares)
2) Once on the ISLD book, your order can be matched with a subsequent incoming ISLD sell order that meets or crosses your price.
3) In addition, once on the ISLD and Nasdaq book, someone without direct ISLD access could SelectNet preference your order on ISLD to fill against your order.
Two clarifications of what cannot happen:
1) Neither ISLD, nor any other ECN, are SOESable. As a result, you will never be filled by anyone placing a SOES order. If your ISLD order is alone at the inside bid, and a SOES sell comes into the market, you will not be filled. The SOES order will sit, unexecuted, until a market maker joins you at the inside bid, or you get filled or cancel.
2) Neither ISLD, nor any other ECN (to my knowledge), will be filled by SelectNet broadcast orders. SelectNet broadcast orders are that are not preferenced to any specific market maker. They are displayed on the Level III display of all market makers, any of whom can execute against the broadcast order. Although it would be a good idea to improve liquidity, I don't believe any ECN's actively match SelectNet broadcast orders against their order book. This is likely due to the fact that it would be too slow, perhaps 1-4 seconds to get a confirmation back from SelectNet.
I hope this clarifies more than it confuses...
-Eric |
