A Closer Look at Adding Liquidity Orders (ALO)

By: twilemon

File Under: NYSE Arca, Options

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From Todd Wilemon: Welcome back! Over the last two days, we have been taking an in depth look at each of the new order types that are coming to NYSE Arca Options Aug. 24, 2009. If you happened to miss the first two, you can read them here and here.

Can you feel the excitement building as we get closer and closer to these order types going live on Monday?

Since this post is the third in our series, let us talk about our most straightforward, yet still innovative, new order type. Please hold the applause 'til the end. Just kidding, you can applaud any time you want.

Drum roll please! Introducing the Adding Liquidity Only order, and I bet you dollars to doughnuts that you will fall in love with this order type.

Adding Liquidity Only orders, or “ALO” if you love those Three Letter Acronyms, are always limit orders, they never take liquidity or route to another exchange. Savor the possibilities. Like all of our innovative order types, the ALO is designed to give you the power to control how you interact in the marketplace on NYSE Arca.

ALO order type follows the “K.I.S.S. principle,” and for once this week I’m not talking about music, but rather the principle of “keep it simple, sugar.”

Here we go:

ALO are limit orders with a Time in Force (TIF) of day.

ALO orders never take liquidity, neither on Arca, nor by routing to an away exchange. If an ALO order can’t post to the NYSE Arca consolidated book, it will cancel back to the order sending firm.

ALO orders can NOT be market orders, IOC (Immediate or Cancel), GTC (Good till Canceled), AON (All or None), FOK (Fill or Kill), NOW or PNP B.

ALO orders with reserve will be supported. Keep in mind that if refreshing the display portion of the reserve order would result in taking liquidity, the ALO reserve order will be canceled back to the order sending firm.

Once again it is time for all the English majors to step out for a cup of coffee while we go over the technical specifications. You might bring back a cup of coffee for us this time! …or not, we won’t hold it against you.

ALO orders will be accepted via FIX and ArcaDirect.

Populating FIX Tag 18 with “6” will designate the order is a PNP. ALO orders will be identified by populating FIX Tag 9417 (Extended PNP) with “A.”

For ArcaDirect, Extended PNP will be populated with “A.”

Let us review. (You never know, I might throw a pop quiz at you one of these times.)

--ALO orders never take liquidity or route to other markets.
--ALO orders are limit orders only with Time in Force (TIF) of day.
--Reserve ALO orders will be supported.
--ALO orders with PNP B instructions will be rejected.
--ALO orders cannot be market orders, IOC, GTC, AON, FOK or NOW

If you have questions regarding this new order type or any other order types please contact your Relationship Manager at relationshipmgt@nyc.com or call the options trade desk at 877-729-7291. See you tomorrow.

Trade ‘em Up!

TW