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John Turney
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Foreign Exchange Infrastructure: Yesterday, Today and Tomorrow

In this exclusive to Traders Magazine, John Turney, Global Head of Outsourced FX at Northern Trust, discusses the evolution of the fx infrastructure and what is to come.

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March 1, 2001

Daytrader Says SuperSOES Will Bring Size

By Peter Chapman

Daytrading firm Protrader is beating the drums for SuperSOES.

Nasdaq's looming automatic execution system is the answer to the liquidity problems experienced by Protrader's customers, according to Lee Maverick, compliance chief of the Austin, Texas-based firm.

The rules of SuperSOES, he argues, will force market makers to show larger share sizes. "If they're working a large order they will use the reserve book," Maverick contended. "In order to use the reserve book the rules say they must display at least 1,000 shares."

That 1,000 shares will make fast and complete fills a reality for daytraders often frustrated trading 500 and 1,000-share orders on SelectNet and SOES, according to Maverick.

The problems with Nasdaq's existing systems are two, Maverick says. First, market makers rarely display size, preferring to quote 100-share markets. Second, market makers are allowed 17 seconds between fills. The average Protrader order of 800 shares could take several seconds to execute. It might even "time out" and not be filled in its entirety, says Maverick. Orders unfilled after 90 seconds are returned to sender under Nasdaq's rules.

"The theory behind SuperSOES is that market makers will show actual size," Maverick said. "It's a plus for the small investor."

Protrader was one of the original SOES bandits, the derogatory term for rapid-fire daytraders of the early 1990s who used the SOES automatic execution system to access dealer quotes.

Nowadays, however, Protrader's customers rarely use SOES, preferring ECNs and SelectNet.