To All: The following was posted on the Trading for a Living thread. Does anyone have any information to confirm or deny this sort or problem with Island/Datek?
Thanks,
-Eric
To: Eric P (490 )
From: jawd Saturday, Jun 20 1998 7:49PM ET
Reply # of 493
I find ISLD to be unworkable at times. It is particularly frustrating to see my order on ISLD say 2000 (20 on L2) then I get a fill say 600; the screen shows ISLD 14 (20-6) then it goes to say 10 - but heck... no fills! So, ISLD is selling for themselves or Datek's account. In the meantime, all the best fills are gone and the price has moved up, I'm left with only 600 - I have to cancel the remaining 1400 order. Datek gets MY other 1400 for themselves!
This activity is called "front loading" - it is illegal and I believe that is exactly what happens. So, if Datek is working a stock for themselves, I dont use ISLD - I'll use ARCA or Selectnet instead. But when ISLD is not working against me, I'll use them because it gives faster results.
To understand this better you have to look at the Market Maker Volume Reports on Nasdaqs trader site. It shows that in stocks like AMZN, DATK (Datek) is in fact one of the most active market makers, trading many hundreds of thousands of shares for their own account!
Also, being heavily into programming - it is no problem for ISLD to write a program to take the best trades for themselves. i.e. see that the price is about to go up, take a limit sale at the lower price and sell it in an instant at the higher price. So, you'll find on ISLD it is easy to get fills only when the price is moving against you. ISLD is a money making machine for the people who run it. They must think they are too clever to get caught.
The only way to avoid the problem is to use a more honest system like ARCA or Selectnet (with a pref works well too).
SOES doesn't work well for me for two reasons: I use 2000 not 1000 shares and also most of the time ECN's are at the bid/ask not MM's, so SOES of course can't trade with ECN's.
Since I've gone to all the trouble of writing this down, I'm going to send an email copy to Nasdaq, josh and others in the hope that it gets fixed/stopped. I hope the greedy Datek/Island crooks straighten up. But I doubt it until they get jailed for a few years. |
