Specialists are allowed to hold an order for 30 seconds before either executing it or handing it off to another specialistand during that time, the price may change.Executives at the NYSE have defended the trade-through rule, saying it's good for small investors.The Securities and Exchange Commission (SEC) has proposed new regulations that would modify the trade-through rule, which it describes as antiquated, by allowing investors to opt out of the rule voluntarily and by permitting traders on fast markets to trade through (that is, ignore) better prices offered on non-automated exchanges.
Defenders of the rule portray it as an essential protection for investors, particularly small investors who find it difficult to monitor their brokers performance.
Opponents argue that its principal effect is anti-competitive; that it protects traditional exchanges where brokers and dealers meet face to face on trading floors from newer forms of trading based on automatic matching of buy and sell orders.
This FAQ is *not* intended as a comprehensive guide to trader status taxation.
That is covered in the Traders Tax Plan This FAQ is a fast and easy way to get answers to general questions, many of which are so often misrepresented over the internet A method of identifying specific shares of securities to be sold for tax purposes--also called "vs.
A customer's order has to be routed to the destination with the best price at the moment the order is entered.
That sounds like a good idea on the surface, but the rule was enacted before electronic markets existed.The trade-through rule as it stands means that if you place an order and the best possible quote is with a particular specialist on the floor of the NYSE, then your broker is required to route your order there.But a NYSE quote is not immediately executableit's more analogous to an advertised price than an actual price.For example, if you're selling the 100 shares you bought on March 31, 2008, ask your broker to write on your confirmation that the transaction is a sale "vs.purchase 3/31/08." For online trades, you should immediately follow up with a phone call to specify your instructions.Then when confronted by the bunko squad, offering the excuse "But sir, I was planning to buy the land back after it declined in value." Nowhere in the world would such a scheme be accepted, rather the perps would be locked up in the hoosgow immediately upon discovery!