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Strategies & Market Trends : DAYTRADING Fundamentals -- Ignore unavailable to you. Want to Upgrade?

To: Kimberly Lee who wrote (4586)	10/3/1999 12:32:00 PM
From: Eric P	Respond to of 18137

Kimberly: In the given example, a 5000 share buy order on ARCA at 80 1/16 would be routed as follows: Buy 400 shares from ARCA at 80 directly off the ARCA book Buy 1400 shares from ISLD at 80 using direct ISLD connection Buy 400 shares (i.e. 100 + 600) from REDI at 80 1/16 using SNET Buy 500 shares (i.e. 100 + 400) from GSCO at 80 using SNET Buy 1500 shares (i.e. 1000 + 500) from MLCO at 80 using SNET Buy 800 shares (i.e. 300 + 500) from MSCO at 80 using SNET The market makers posted with an ask price of 80 will receive their SNET preferenced orders at their posted price of 80. They will not be privy to the fact that you are willing to pay as high as 80 1/16 for your shares. Therefore, the market makers have to decide on whether to fill your order at 80, or back away. If they decide to back away, and your ARCA order will continue to preference other MM's and ECN's available at 80 1/16 or better. If all MM's and ECN's back away leaving the best offer above 80 1/16, your ARCA order will become a limit order and posted on the limit order book of ARCA and Nasdaq Level II. Obviously, ARCA is not a perfect order execution system. But by better understanding how it works, I get a better understanding of how and when to use this tool. Good luck, -Eric