ISLAND INET ROUTING STRATEGIES

In Laser, please go to TRADE menu -> Routing Strategies ->

DOTA = Sweep the INET book and the street. If the order is not completely
filled, the remainder is sent to the NYSE floor. The order IOC’s the INET
book at the price it would send to another destination before sending it to
that destination. Finally, it is sent to the NYSE floor at the limit price
specified on the order. Routing destinations are INET, NASDAQ, Brut and
ARCA.

DOTI = Sweep the INET book and go directly to the NYSE floor. The order
will sweep the books at the more conservative of the NYSE quote or the limit
price specified on the order. If the order is not completely filled, it is sent to
the NYSE floor at the limit price specified on the order. If you are a buyer,
the more conservative price is the lower of the limit and NYSE price. If you
are a seller, the more conservative price is the higher of the limit and NYSE
price.

STGY = The order will sweep the INET book at the price it would send to
another destination before sending it to that destination. Finally, it will be
posted on INET. This strategy will not send the order to DOT. All orders,
except IOC orders, will post to the INET book if not filled in the market.

SCAN = The strategy is similar to STGY except once it posts on the book it
will not route out again if the market moves.

SPDY = The order will sweep the INET book at the price it would send to
another destination before sending it to that destination. If the order is not
completely filled, it will post on the INET book. If the order is for a security
eligible for a de minimis exception to the trade-through rule, INET will
ignore AMEX prices when adjusting the order during a locked or crossed
market.

DOTM (DOT when Marketable) ― After routing to accessible market centers,
the order will reside on the INET book until marketable on the NYSE and
Amex, at which time the order will be routed via DOT.

DOTP (DOT after Posting) ― After routing to accessible market centers, the
order will reside on the INET book for a pre-determined period of time,
currently set at three seconds, after which the order will be routed via DOT.

For the traders who use INET to trade NYSE stocks. For those who want to use ISLAND (or inet same thing) to trade to the NYSE specialist, one thing that was a big pain was when the specialist didnt have any shares, NYSE routed out for you and charged you .0025. Well to avoid this fee, we have something new. This is the new REG-NMS ISO orders for NYSE via INET. This will use INET to route to NYSE specialist and if specialist does not have the shares, then immediately cancels. This way you will never get charged the .0025 fee and inet to nyse will always be free.


To use them, enable strategy ISNY in Trade ---> Routing Strategy, and enable
INET routing in General tab in Trade Settings.

The order will be sent as ISO do-not-reroute order.

For INET trading go to TRADER -> ROUTING STRATEGY -> and select either INET and STGY

This enables trading for both nasdaq and nyse stocks.

Why did NASDAQ make changes to the protocol specifications?

Effective Monday, March 3, 2008, NASDAQ® will retire order routing strategies DOTN, DOTO, SPDY, STGA and SWIM, as each of these strategies are redundant with other strategies. Therefore, orders entered with these routing strategies in the “ExecBroker” or “Preferenced” MMID fields will be invalid and will reject back to the entering party.
What routing strategies can be used in place of the retired strategies?

The following active routing strategies can be used to replace the retired routing strategies:

* DOTN should be replaced with DOTA
* DOTO should be replaced with DOTM
* SPDY should be replaced with STGY
* STGA should be replaced with STGY
* SWIM should be replaced with SCAN

For information on each routing strategy and how it works, please refer to the Order Types and Routing Strategies Reference Guide.
What if my port has a defaulted routing strategy?

If your port is configured with a default routing strategy set to one of the retired strategies, NASDAQ will convert it to the corresponding active strategy listed above.
Will there be any pricing changes?

No, NASDAQ’s pricing for orders will not change as a result of this strategy consolidation.
What do I need to do?

* If you are using any of the strategies being retired, please replace it with one of the active strategies listed above any time prior to Monday, March 3, 2008.
* Obtain the updated programming specifications from the NASDAQ Trader® website.
* Prepare your systems to accept the change.

STRATEGY = STGY for ISLAND is the way to Avoid the rediculous .0025 route out fee that NYSE started to charge for all trades.

And in other developments....

INET RASH DOTD will bypass all of the various books (Arca, INET, Nasdaq) and will send your order directly to the NYSE. What's good about it is that if the NYSE doesn't route your order, then it's actually quite cheap! In fact, it's about 1/3 the cost of using ISI (so it should be about 0.001 cents per share...if anyone knows, please correct me on this).

The only problem would be if the NYSE does route your order to other market centers, then you'll have to eat that 0.0025 cents per share charge.

However, I heard that the percentage of orders that are routed by the NYSE is relatively low, so using INET RASH DOTD may be a great ECN to use in the meantime....I'll have to double check some stats to see if this is in fact true.

Another problem is that there is no real-time way of knowing how many shares were routed by the NYSE and as a result, the P&L's may not be correct. The prop firm I work for stated that adjustments to our P&L will occur a few days later after they receive the tally of the number of shares that were routed by the NYSE and will reflect the number of our shares that the NYSE routed.

Thus, I will not know if my P&L has taken into account that 0.0025 cents per share fee on my orders or not. Again to review, I'm charged 0.0025 cents per share if I send an order to the NYSE and they route it away to other market centers (Arca, INET, Nasdaq, etc).

How to have NYSE not route out so you save on the .0025?
What I can tell you is that this new ECN is called INET RASH ISNY.

And what it will do is it will act like a fill-or-kill order, meaning that once you send in your order, if there are shares available, it will fill you, however if there are not enough shares available, it will partially fill you and cancel the balance. Finally, if you send this order and no shares are available, it will automatically cancel.

INET RASH ISNY can only be used to remove liquidity and it WILL NOT BE ROUTED BY THE NYSE! That's excellent news - at least we will not have to worry about that 0.0025 charge.

What's more.....it's going to be dirt cheap to use it! It'll only cost you 27 cents per 1000 shares to use (or 0.00027 cents per share). Ohhhhhhh man! I'm gonna love using it!

And you know that since it's an INET RASH order, that it's gonna be fast!

I'm loving it already! It's fast, it's cheap, and it's exactly the kind of thing I do anyways (i.e. if I get partially filled, I quickly try to cancel the balance of my order).

Apparently our prop firm is all setup and ready to use it.....but we are waiting for NASDAQ (the owners of INET) to complete implementation on their end.

I was told that the earliest we could get INET RASH ISNY is possibly this Thursday. I can't wait!

But for now, I'm going to continue to use INET RASH DOTD to punch into a position (and hope my orders don't get routed by the NYSE) and I'll continue using Arca or INET to exit my positions by adding liquidity. Of course, I may use INET RASH DOTD to exit my position if prices start running away from me.

Just remember that if you have any questions or concerns about the new NYSE Hybrid Market, you should definitely check out the HybridTalk blog. Just do a search and you should be able to find what you're looking for. Otherwise you can ask a question and Ray over there at HybridTalk does an excellent job of answering questions and explaining them in layman's terms.

http://www.nasdaqtrader.com/Trader.aspx ... stTrading2

Current pricing

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