Que, a MM question regarding stops:
Earlier I wrote that I'd been stopped out of BNGO at 5 3/4. My report from Datek came back as four or five partial fills (this makes me see how an all-or-nothing order can help) Apparently the MMs grabbed my shares, then sold them to anyone with a standing buy (or held them for their accounts, though given the small sizes of the fills, that seems less likely). If somebody has a standing limit order in for 5 7/8 or 6, and I have a stop at 5 3/4, I presume the market maker can fill both orders and make the spread. I think that's what happened. I don't think this was a buy for a market maker's account. But what if I'd put in a stop at 5 1/4? Could the market maker grab my stop, then fill at 6 and pocket the difference? What's to (pardon the pun) stop this? If they grab the shares by bidding 5 1/4, does the ask have to follow it down? For how long? For instance, say somebody has a standing buy limit order at 5 1/4. Would the MM have to give that order precedence? Or suppose there's a standing buy at 5 3/8, assuming the MM didn't have to honor the limit order and scarfed up the shares. Would a MM wanting to turn around and sell the shares then have to fill a standing bid at a lower price, say, 5 3/8, first? What are the exact rules in this game?
J |
