LPS5,
Yes, because hitting a bid is selling stock. Taking an offer would buy stock.
DOH!! OK you got me there LOL. But that stupid mistake does not negate my point. [Hitting a $20 bid will never sell anybody a share of stock at $20.]
Fees are indeed fees, and stock prices are stock prices, and the issue revolves around the total cost of the execution. Not prices vs. fees, but price plus fees, to disclose the total COST of the transaction.
Most emphatically it does NOT represent the total cost of the execution. How can you say that? The total cost per share of a transaction depends on all the fees of the transaction, distributed across the number of shares including broker fees. I know the excuse for including only per share based fees, related to use of Nasdaq provided systems, but I don't think it flies.
The issue boils down to one of undisclosed fees that impact the total cost of an execution.
Uh uh.. NO WAY!!!!! It is incumbent on the broker to disclose to the investor that fees charged for routing of orders via SelectNet (or whatever routing) are being passed along, IF the broker chooses not to absorb those fees. They are still FEES, and they do NOT have to be disclosed in the quote montage of (up until now) PRICES.
Perhaps the plan would be more palatable if the dealers' varying execution performance, in terms of impact, slippage, delay and the like, were reflected in their price quotes on a per share basis? I might go for that, but for the fact that ECN fees are fixed, whereas dealers' execution performance varies with the overall market trend, the type of security, the manner in which they execute the order, etc...all of which make a single number a bit unfair.
Agreed, but you and I both know that will never happen. Even if the very real contribution to the total "cost" of a transaction from poor performance could be quantified, it will always be a fuzzy number and never find it's way into the quote montage, and the superior (if it could be proved to be so) performance of an ECN will never be used to elevate its position in the queue.
Anyway. I'll say this; I prefer this initiative in the form of the integration of the per share amount into the quote more than the version wherein dealers would be put ahead for executions at a certain price level. I'm just more comfortable with it.
Am I not up on the latest version of this thing? Are you saying that dealers are no longer going to be put ahead for executions because their "net price" is supposedly better than the fee-added ECN price? If I post a $20 bid on my favorite ECN before a MM posts his $20 bid, am I going to get hit before he does (assuming of course the ECN is a participant, which I doubt any of them will be under this proposal)? If there is no priority of execution based on this disclosed net price, what is the point of adding the complexity of different prices to the montage? Disclosure can be complete and accurate without that.. It only takes a table that most brokers provide on their web site anyway that tells you how much fee gets added if you get an ECN execution OR if they choose to do so, they could simply not pass the fee along and maybe (or not) throw in a table to convince you what great guys and gals they are for absorbing it.
You know I am not trying to persuade you to my point of view, but somebody needs to state the other side for the sake of balance :)
Respectfully,
Dan |
