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

To: Eric P who wrote (10589)	11/6/2000 9:05:06 PM
From: LPS5	Respond to of 18137

This article was in today's Wall Street Letter: November 6, 2000 VOL. XXXII, NO. 45 SUPERMONTAGE OFFERS PRICE/TIME OR PRICE/SIZE PRIORITY. Zachery Kouwe The most fundamental change in the latest amendment to SuperMontage, the Nasdaq Stock Market’s proposed order display system, allows a firm entering the order to choose various prioritization methods. The default method, “price/time priority,” will first try to internalize an order with the entering firm. If the order is not filled internally, the system will allocate to other Nasdaq participants and anonymous agency orders of UTP participants in strict price/time priority. These and more details of the workings of SuperMontage will be posted on Nasdaq’s Website “within a week,” sources said last week. This will mark the first time Nasdaq has detailed the technical specifics for any of its systems online for public viewing. The functional description, sources say, is intended to provide a detailed but simply-worded outline of how SuperMontage will actually work. The description is part of a deal negotiated between Nasdaq and Bloomberg Tradebook, said Kim Bang, Tradebook’s president. Officials at the electronic communication network offered their support of SuperMontage on the condition that Nasdaq allow investors to choose how they will view orders, and that a description of the technological specifications be posted on Nasdaq’s Web site (www.nasdaq.com). “Both Tradebook and Nasdaq agreed that this functional description was a good thing to do because it gives everyone a chance to see how this system really works,” Bang said. A Nasdaq spokesman declined comment. The description of SuperMontage, which is still being developed, details how orders will be displayed and processed. It also explains how investors can choose to execute orders according to price or size priority. According to release 1.0 of the description obtained by WSL, entering firms can override the default method by choosing either “price-time priority taking into account the presence of access fees” or “price-size priority.” The former allows the entering firm to preference its order so that it is routed to Nasdaq participants that do not charge access fees. The “price-size” option allows the order provider to specify that they want orders matched according to share size rather than to the first posted quote. In addition, for non-directed orders, broker/dealers will have the choice to submit orders anonymously to all market participants. This is seen as a boon to market makers since customers often used ECNs for the anonymity they provide. However, the Nasdaq description notes that this feature offers “pre-trade anonymity only – the market participant ID will be made available immediately upon execution.”

To: Eric P who wrote (10589)	11/6/2000 10:27:19 PM
From: Jon Tara	Read Replies (1) \| Respond to of 18137

Eric, am I reading this correctly? "... this proposal simply mandates market makers post their own proprietary quotes separately from their customer agency quotes.It also requires them to show their top three levels of bid/offers on these customer orders" I take this to mean that we will typically see 4 bids and 4 offers from each MM? Their own proprietary quotes, as well as the top 3 levels of their customer agency quotes? So, this is going to balloon the volume of NQDS data by a factor of 4?