Option Traders Unite Group Forum » market structure - are the market makers screwing us?

market structure - are the market makers screwing us?

Nophotosm Brokerage Account

Posted by DefLeopard on November 06, 2008 (03:55AM)

I've noticed that when I put in non-marketable orders - meaning buys below the ask or sells above the bid - my order is replicated.  For example, if the spread is 50 cents bid by 60 cents asked and I put in a buy at 55 cents, all of a sudden all the exchanges match me at 55 cents.
Here's what I think is happening.  The market makers route market and marketable orders to exchanges based on whether they want to take the other side of the order.  if they want to buy at 55 cents now they can route a sell market to another exchange (not the one where they posted my order) and buy at my price thus depriving me of a good execution.

does this make sense to anyone?

i.e. do they notice that it somewhat sucks to post non-marketable limit orders?
Monkey_thumb Brokerage Account

Posted by OldFart on November 06, 2008 (04:40AM)

Actually it is fair. You are moving the markets, basically you are first in line before the market makers. The market makers are not willing to match your price but they think somebody else might. So they are putting your order first

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