Is the NYSE Manipulating Trades?

Gilbert “Gman” Mendez is the Head Trader at SMB Capital.

All my pre-hybrid sketchy experiences with NYSE have left me with a sour taste. If you were to sit at my desk, you would hear how I’d pay higher ECN fees to EDGX or get worse fills rather than to give any business to NYSE. I refuse to send any orders through them. And it is not like my 50Mln shares a year would really make a huge difference. Call me loco but I just don’t give them my business.

Although, while reviewing my numbers from last year I realized that being overly stubborn about this cost me close to 40-50k — and that’s just a low ball. Talk about a self-imposed rip. In the words of Chaz played by Will Ferrell in Wedding Crashers: “What an Idiot!!”

So, coming into this year I made changes to my execution hotkeys. I added NYSE sweep keys and I moved them up the ECN toggle list for bidding and offering stock.  And while my ECN fees have come down slightly, I am disturbed by the shenanigans of how my orders are treated. Let me give you a couple of examples.

First, I must admit I have never been a fan of stop orders. But now that I have way too many positions riding at the same time, it is the only way I can manage my risk. Nonetheless, I only use orders triggered by prints locally on my computer to route through ARCA. I have always felt that stop orders that reside at the NYSE exchange can be manipulated. The exchange can argue all they want about the floor specialist not being able to see the orders, but I find it to be too big of a coincidence that stops too often go off at some mysterious prints. Check out what happened to the trader who sits next to me who put in a NYSE buy-stop at 45.24 for 100 shares to cover his short.

Someone please explain how it is possible for a buy-stop that is hosted at the exchange to go off when 45.24 prints but does so only by printing the 100 shares that were in the buy stop. Coincidental? Maybe. Sketchy? Very!

But wait let me show you my personal favorite these days. Getting my orders front run by NYSE. Let me illustrate what this looks like on the tape with the following short clip:

This front running nonsense happens to me at least 5-8 times a day — often when I have size in a position. I am starting to wonder if I am really saving that much money by trading again with my boys at NYSE. I really do wish some of those tens of thousands of dollars that I annually “contribute” to the SEC actually went toward making the system a bit more transparent. It disgusts me that I have to deal with these shenanigans. I am all for businesses making money when offering a service, but this is just ridiculous.

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