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Strategies & Market Trends : The Final Frontier - Online Remote Trading

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To: Dan Duchardt who wrote (8345)	7/26/2000 6:17:20 PM
From: Eric P	Read Replies (2) of 12617

It's great if your broker has an auto execution agreement with some MM, but when you don't have that it's a pain. Unfortunately, in your example you can be equally screwed even if your broker does has a autoexecution agreement with a market maker. The autoex agreement will only apply to market orders. They will often take your limit order and post it on BRUT or REDI to meet the limit order display rule. Then they can still fill any in-house market orders on their own books and not be required to execute against your order on the ECN. Essentially, they can exclusively profit from their own order flow and not allow their customer limit orders to interact with their other customer market orders. In the end, you will often be required to lose the spread unless some trader takes the other side of your trade, or a market maker has a big order to fill that will move the market against you. The majority of the order flow through the marketplace will never have a chance to interact with your limit order. Life's a beach. And while there, you must follow the governing rules or play somewhere else. -Eric

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