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Non-Tech : MB TRADING
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To: bobby is sleepless in seattle who wrote (4066)2/27/1999 1:46:00 PM
From: brec  Read Replies (1) of 7382
 
No broker accepts market orders for ISLD because Island, as an ECN, is a limit order book. That's all it is: it's not a market maker nor specialist. It can post limit orders and can match incoming limit orders with ones previously posted on the opposite side.

It would be theoretically possible for an ECN to accept a market order, which would take out as many orders on the other side as required to fill the incoming order (or to provide a partial fill after all orders on the other were taken out). But no responsible broker would enter such an order for a customer, nor would any sane trader enter such an order for himself, because there would be no way of assuring a fill anywhere near the price of recent trades. There could be large price gaps on the order book.

The basis of market orders is a source of liquidity, such as a market maker or specialist, which will step in when the order book can't fill the order at "reasonable" prices.
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