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Jared Dillian
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The Great Rebalancing

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March 15, 2007

Sweep Orders Debut

By Peter Chapman

Nasdaq and the New York Stock Exchange are introducing systems functionality and rule changes that permit their customers to submit intermarket sweep orders. ISOs, a new order type that came out of the Securities and Exchange Commission's Regulation NMS, are expected to be used extensively by traders. Some observers expect at least half of all orders going forward to be ISOs. Traders who send ISOs to market centers such as Nasdaq and the NYSE are allowed to trade on those marketplaces at prices inferior to those found elsewhere. To do so however, they must simultaneously attempt to take out the better priced quotes at other market centers. Nasdaq is modifying its Rule 4759, relating to Intermarket Trading System (ITS) commitments, to incorporate ISOs. The New York describes its ISOs as immediate or cancel limit orders.