Trading Stocks
IMPORTANT: New Regulation NMS (National Market System)
The U.S. Securities and Exchange Commission adopted "Reg NMS" in 2005, which is a series of historically groundbreaking initiatives designed to
modernize and strengthen the national market system for equity securities. Many of the new rules went into effect on July 9, 2007.
The new rules includes Rule 610, which addresses access to markets; Rule 611, which provides intermarket price priority for displayed and
accessible quotations; Rule 612, which establishes minimum pricing increments; and additional amendments to plans and rules governing the
dissemination of market data. (Go to the SEC Reg NMS website here.)
Most relevant to Newedge USA trading clients is the "Order Protection Rule" (Rule 611) which requires trading centers to establish, maintain,
and enforce policies and procedures to prevent "trade-throughs" - the execution of trades at prices inferior to protected quotations. To be
protected, a quotation must be immediately and automatically accessible and be the best bid or best offer of a national securities
exchange or national securities association (collectively, "self-regulatory organizations" or "SROs"). Certain NMS exemptions to the
trade-through rule are not being offered by Newedge at this time.
For example, if XYZ is quoted on the New York Stock Exchange at 10 bid and is also quoted on the NASDAQ Stock Exchange at 10.01 bid, the NYSE
now cannot execute an incoming sell order at a price less than 10.01. The NYSE can elect to execute the sell order itself at 10.01 or
forward the order to NASDAQ for execution.
Please note that due to the new rules, the 9.95 routing choice will no longer be available as the market maker would have to link some of the orders to a
national exchange or trading center and there would have substantial linkage fees.
It is important that our clients understand that the Newedge PreferrredTrade system is designed to ensure your compliance with Reg NMS rules via
the market providers, regardless of your routing choices.
Routing Choices on PreferredTrade Version 6.3 Platform
NYSE (Hybrid Market)
The NYSE Hybrid MarketSM is a new market model that integrates the best aspects of the auction market with automated trading.
NYSE ARCA
NYSE Arca is the NYSE's Electronic Communications Network (ECN). NYSE Arca is a choice that combines the traits of current market structures
with new technology.
NASDAQ
Offers a centralized book comprised of multiple market makers and ECN's that can be accessed electronically. Can be used for all limit, market,
or marketable orders in both listed and OTC securities.
AMEX
Orders directed to the American Stock Exchange will be routed to the AMEX, even if the NYSE is the primary exchange for the specific stock.
AUTOTRADE
Orders sent via the AutoTrade route will be directed to NYSE Arca for listed stocks and to NASDAQ for OTC issues.
WIZETRADE ORDERS
All users of the WizeTrade or CommandTRADE software will have their orders directed to the NYSE Arca for listed stocks and to NASDAQ for OTC trades.
Bulletin Board and Pink Sheet stocks are not subject to the new NMS rules and also are not eligible for most of the above automated trading
centers. These orders need to be routed to AutoTrade or PT Desk.
PT DESK
PT Desk is worked by a trader on an agency basis, and orders are executed depending on market conditions and available liquidity as determined
by the trader. This process will take more time than an order executed during the automated routing. The order is entered into its order book
on the desk and worked by a Newedge USA trader. Disclaimer: PT Desk orders are executed on a not-held basis.
Note that Newedge reserves the right to charge customers any related linkage fees that may be assessed by an exchange or trading center.
If you have any questions on any of these routing destinations, please do not hesitate to call our customer service desk for an explanation
at 888-781-0283.
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