ok, first off shame on you for opening a post with that title. You need help.
More seriously, the SEC used the 5th anniversary of the flash crash, and the Sifma conference to announce the approval of the tick study, with trade at. The tick study, because IPOs have disappeared. Oh wait that was the 2012 reason. The tick study cause hey we gotta do something.
Ok we widen ticks for everyone but retail….the discount guys and wholesalers have enough money to buy hookers and blow for anyone important so they get a pass. Fine. Trade at isn’t even completely terrible. But trade at as designed by the lit exchanges? Houston we have a problem.
Under this version of trade, not only must fully dark venues and lit venues not at the NBBO offer real price improvement, but lit venues can’t trade at the quote for greater than the posted size unless all other nbbo quotes are exhausted. Let’s think about this for a second…cause the regulators didn’t.
If XYZ is 10.00 a 10.01, with both NYSE and BATS on the bid for 500 shares each and I have 2000 to go what happens. I spray route to each – say 1000 a piece for simplicity – and they can only trade 500 and route away to the other market or reject. Great rule in 2007 when serial routers were the order of the day. Idiotic rule that actually harms my ability to capture liquidity and invalidates all the money my brokers spent on router development in 2015. Nobody sends an oversized order to a lit market without satisfying other lit quotes simultaneously. Not in the last 5 years.
And who wins when my router becomes less effective? I think we all know the answer to that one.
The markets lost yesterday, and uninformed participants cheered on this regulatory impediment. Well done exchanges, you designed a rule to aid your intermediary buddies and like Huck Fin made the saps think you were doing them a favour.
What next, a rule that says asset managers must post trade intents on public websites for greater transparency?
Let’s wake up people.