It seems one of NYSE/ICE’s newest order types didn’t fit the bill or work out so well.
According to trader notice sent from the exchange to clients on February 26 at 4:07pm, NYSE/ICE temporarily deactivated the Add Liquidity Only (ALO) and ALO Day ISO modifiers order types.
“Beginning tomorrow, February 27, 2015, the ALO and Day ISO modifiers will be temporarily deactivated. We will advise when the functionality will be available again,” the notice read.
Eric Ryan, head of NYSE press office said the exchange doesn’t have any further comment beyond the trader notice at this time when contacted by Traders to find out why the order type was rescinded.
So much for exchange transparency.
This follows the implementation of the order type on February 19.
Currently, the exchange offers 20 order types as posted on its website.
In a notice to traders on the 19th, the exchange said that NYSE and NYSE MKT will activate the ALO modifier and the “Day” time in force for Intermarket Sweep Orders (ISOs). At that time, the ALO designation could be added only to MPL orders and all ISO orders are treated with a time in force of “immediate or cancel.” When it was introduced, the Day ISO could be executed on arrival to the extent it can and any remaining quantity will be displayed on the order book and will not route. Lastly, Day ISO may also be optionally designated as ALO.
The routing of ALO and ISO orders directly to the broker systems was not supported. However, as envisioned, floor brokers could enter orders with ALO instructions on behalf of their customers sometime this month.
The yanking of the newly released order type raised questions, as one market expert noted the mystery in which the order type was pulled.
“All we saw was the Trading Notice and that was it,” said one trader.
Another source said he didn’t even know the order type was pulled.
A market expert told Traders that in the spirit of transparency, the lack of detail surrounding the rescinding of the order type was problematic.
“Was the order type pulled because they missed a filing with the SEC, like in the case of Direct Edge,” the expert said. “Or was there some problem with how it was implemented in their systems? Who knows?”
Recently, the Securities and Exchange Commission announced a historic $14 million penalty against Direct Edge, now owned by BATS Trading. The fine was in response to Direct Edge’s continued disobedience to meet SEC requests for information and approval of certain order types. The exchange also purportedly broke the terms of a 2011 settlement with the regulator.
Both BATS and the SEC declined to comment on the fine. Direct Edge didn’t admit wrongdoing in the January settlement.
