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Strategies & Market Trends : The Final Frontier - Online Remote Trading -- Ignore unavailable to you. Want to Upgrade?

To: JDTrader who wrote (6834)	3/26/1999 6:40:00 AM
From: Eric P	Read Replies (5) \| Respond to of 12617

The issue was the program's failure to allow the SELLER to put an ask price below the inside bid or the BUYER to put a bid price above the inside ask to close his position in the fast market that has turned against him. DO NOT confuse the issues. It sounds as if you may be misunderstanding their point. I will try to clarify. You point out that CyberTrader will not allow you to post a bid above the inside ask, or post an ask price beneath the inside bid. However, please note that this 'feature' is not offered by MB Trading, nor Castle Securities, nor The Executioner, nor any other daytrading, electronic, full service or other broker. This is NOT a 'program failure'. This is merely the rules of Nasdaq. Nasdaq prohibits the posting of any orders that would lock or cross the market (Lock = if posted, your bid (ask) would match the current inside ask (bid); Cross = if posted, your bid (ask) would be above the current inside ask (bid)) without first making an effort to directly execute an order against the market maker to whom you would be locking/crossing and given them 'reasonable time' in which to execute your order and thereby avoid locking/crossing the market. Since ECN's have no way of knowing whether you have attempted this or not, they will not allow accept or post any order which would lock or cross the market (Not ISLD, not INCA, not TNTO, not REDI, etc). In addition, in their response to you CyberTrader Technical Support mentioned another interesting point that I was not aware of. They mentioned that they may soon be offering the ability to place Subscriber-only orders to ISLD. I will explain why this may be significant. Note: There are three classes of orders that can be placed on ISLD: 1) Displayable on Nasdaq (98+% of all ISLD orders, also likely the only option available on virtually all software available to individual investors), 2) Subscriber only, and 3) Hidden. As I said, most ISLD orders are of the first variety. If your order is the best on the book of ISLD, it will be forwarded to Nasdaq as the best bid or ask for the ISLD system and seen by the Level II displays everywhere. However, if this type of order would lock/cross the market, then ISLD cannot post this order to Nasdaq without breaking Nasdaq rules, therefore, after checking for matching orders on the ISLD book (and executing against any matching orders), your order will be rejected by ISLD and returned to you. However, by placing a Subscriber-only order, you are requesting that your order be placed in the ISLD book only and specifically NOT be sent to Nasdaq as part of the Nasdaq ISLD quote. As a result, your order would not break Nasdaq lock/cross rules because it would not be displayed on Nasdaq Level II (although it would be displayed to anyone having access to the ISLD book). For completeness, a 'hidden' order is like a Subscriber-only order except that it does not appear anywhere. It will be able to execute against any current or matching order. Kind of a stealth order. For more information, see isld.com Good Luck, -Eric Disclosure: No, I do not work for CyberTrader. I do not have an account at CyberTrader (my account is at Castle Securities). I don't even personally know anyone who works there or has an account there.