Q, thank you for the example, which is a great improvement over mine. I follow up to this point:
<Then the bid is at 5 3/4 - to get the price to 5 3/4 he would need to sell some shares to either NITE or NFSC, say 100 shares @ 5 3/4 to NITE.>
I assume you mean that for the 2,000 shares I have a stop order on to show up under the ask column, our market maker would have to enter an ask of 5 3/4, below the previous low ask of 6. But since my 2,000 shares aren't in the ASK column, how would the market maker know they're there?
Even then, two other market makers have bids in at 5 3/4 ahead of our market maker. Wouldn't those orders fill first? Wouldn't they too know of the 2,000 shares with the stop market order (though, as I say, since they're not in the ASK column in your post, I'm not sure how they'd see them)? Or would they fill their orders, with our market maker picking up the leftovers? Or is it not a queue, except when speaking of filling bids and asks on the way up and down, once a particular bid or ask is hit? I thought it the former, first come, first served, but I may have misunderstood. Otherwise it would be pure quickdraw once the ask hits 5 3/4 in the scenario you layed out.
Incidentally, I use Datek, and it's my understanding that Datek doesn't match buyer and seller to pocket the spread, which other Nasdaq broker-dealers can and do do. Is that your fix on Datek too?
Thank you again for the table and the tutorial, Q.
J |
