Sat, 02 Oct 2004
Thanks to MyMoneyBlog,
I will soon be the owner of an iPod Shuffle courtesy of ex24. ex24 operates order books for a handful
of securities that allow it's customers to trade odd lots (less than 100
shares) amongst themselves. Basically, they are both an ECN, like Island (now
INET) or Archipelago, and a
broker/dealer. The description of how quoting works on their order
books makes for somewhat interesting reading.
At times when the CQS is not operating, ex24 raises its offer quote by one
cent each time members collectively buy from ex24 for a net 99 shares in that
after-hours session and lower its bid quote each time members collectively sell
to ex24 for a net 99 shares in the after-hours session. If ex24 raises (lowers)
its offer (bid) quote due to after-hours purchases (sales), it increases
(lowers) its bid (offer) quote by the same amount to maintain the same spread
width. After ex24 has raised (lowered) its offer (bid) quote by five cents it
either keeps its quote at that price or deletes its offer (bid) quote,
depending on market conditions.
The decision whether to freeze the quote or delete it is effected pursuant
to an algorithm that operates automatically. This trading parameter is intended
to provide ex24 a degree of protection from the risk associated with posting
quotes during times when CQS is not operating. Additionally, ex24 reserves the
right to withdraw its quotes at any time during the after-hours session, which
it might do in response to significant news affecting the price of a security
traded on ex24 at times when CQS is not operating.
Finally, ex24 may program its algorithm to refrain from posting its offer
(bid) quote if customer orders to sell (buy) at or near the CQS offer quote
reside on the ATS. ex24 is in the process of determining the amount of customer
orders that might cause it to refrain from posting a quote. Regardless of the
metric chosen by ex24, the algorithm which determines whether or not to
disseminate a quote operates automatically.
If you open an account, fund
it with $500, and make at least
one trade, they'll send you a free iPod Shuffle.
Apparently, it's possible to use the Shuffle with Linux so I'm
a happy camper.
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