Sterling
Financial Systems Inc.
225 West Washington Street, Suite 1014
Chicago, Illinois 60606
(312) 346-9600
SMART-SWIPE
Orders for the Sterling Trader® System:
June
15, 2005
Sterling is
pleased to announce that a Smart Swipe function (SWIPE)
has been implemented in the Sterling Trader® system.
This feature will allow traders, with the push of a
button, to send orders to selected destinations for
quick execution within a specified price tolerance.
The following concepts have been implemented to support
the SWIPE function:
- Thru-Price Delta – this is
a price variance, which in conjunction with the best
bid or offer will yield the Thru-Price, or the price
of the highest tolerance the trader is willing to
buy or sell the stock. For instance, if the best offer
is currently at $25.67 and your Thru-Price Delta is
$0.02 then your highest bid for the stock should not
exceed $25.69 (25.67 + 0.02). The Thru-Price Delta
may be set to zero, in which case your Thru-Price
will be equal to the current best bid or offer. Finally,
the Thru-Price Delta may be set to the special designation
of <No-Delta>, which will result in the Thru-Price
becoming dynamic and equal to the best bid or offer
as quoted by the execution destinations specified
on your list at the time of the SWIPE process.
- Thru-Price – this is the
highest tolerance price point, at which you’re
willing to buy or sell the stock. The general formula
for the Thru-Price is: Current Best Bid less Thru-Price
Delta if you are selling; or Current Best Offer plus
Thru-Price Delta if you’re buying.
- SWIPE Execution Destinations –
this is a list of execution destinations (exchanges,
ECNs, or brokers) to which you want to send SWIPE
orders. In order for the execution destination to
be considered suitable for SWIPE it needs to be quoted,
or present in the Level-2 display. An execution destination
must also be accessible, i.e., there is an electronic
link through which Sterling system can send orders
to the destination.
- Execution Destination Ranking –
the execution destinations used for SWIPE should be
ranked or assigned sending priority. This ranking
is established by the order in which the executions
are entered into the Sterling system by the trader
using the front-end software. The ranking is used
when there are two or more destinations that are quoting
the same price at the time the SWIPE function is performed.
The highest rank will determine where the order will
be sent.
Once the trader establishes the Thru-Price Delta and
has a list of Execution Destinations defined in the
Sterling Trader® Pro software, he’s ready
to send SWIPE orders. Because the SWIPE function may
not be suitable for all trading styles, the manager
of each trading operation needs to enable traders before
they can use it. Traders may be enabled or disabled
for SWIPE using the Trader List window of the Sterling
Trader® Manager.
When using the SWIPE function the following should
also be considered:
- Traders can enter a SWIPE order from either the
Level-1 or Level-2 Order Entry window. The Destination
Field should be set to SWIPE and the Price Field should
contain the value of the Thru-Price Delta. The <No-Delta>
special selection is available in the pull-down menu
of the Price Field.
- The SWIPE orders can also be entered using the Hot
Keys. When setting a hot key the destination must
be SWIPE and price should contain the Thru-Price Delta
value.
- All SWIPE orders are sent to the execution destinations
as IOC (Immediate-or-Cancel).
- A new Hot Key labeled “Cxl Smart Swipe”
has been added to allow for cancellation of all SWIPE
functions in progress.
- The existing “Cxl All Orders” hot key
will affect SWIPE orders, as well.
- An optional pop-up notification window will be displayed
when the SWIPE process is completed. The pop-up window
setting is located in the “Global Order Entry”
settings under the “Misc” tab.
- The Thru-Price is computed based on the NBBO with
exception of the <No-Delta> selection.
- The SWIPE process is concluded when one of the following
conditions occur:
a) SWIPE order is fully filled
b) SWIPE process is manually cancelled using the “Cxl
Smart Swipe” hot key
c) SWIPE cycle does not yield an order to be sent
to any of the execution destinations – all destinations
are quoting the stock outside of the Thru-Price or
they don’t post their quotes at all.
- The Thru-Price is computed once at the time of initial
request to start the SWIPE process from the Level-1
or Level-2 order entry window. The exception to this
is when the <No-Delta> designation is used,
which indicates dynamic Thru-Price settings.
IMPORTANT NOTE:
Use of this feature is at your own risk only –
no financial responsibility will be taken for malfunction
of the system.
Your comments and suggestions are welcome
Usage example: Smart Swipe Order Entry (SWIPE):
- IBM is currently offered at 76.25 on NBBO.
- Your designated SWIPE execution destinations are
ARCA, INET, NYSE, AMEX, and BRUT, in that order of
ranking.
- You want to buy 1000 shares of IBM at the Best Offer
with a Thru-Price Delta of 0.04. Your Thru-Price will
be 76.29, which is the product of the Best Offer plus
the Thru-Price Delta. You set the execution destination
field to ‘SWIPE’, your Price Field to
0.04 and send the order. You send the Smart Swipe
order by using a Hot Key, or by clicking the ‘Buy’
button.
- You receive an execution report for 200 shares @
76.27 from ARCA. The remainder of 800 shares is immediately
canceled (IOC order). The Smart Swipe process continues.
Next, the remainder or ‘Lvs Qty’ of 800
shares from the initial order gets “swiped”
again at the top of the Level II just as before. Looking
again for the best available offer price as quoted
by the execution destination, a new order is sent
to one of the destinations from the Smart Swipe list
that is quoting the best offer price within the Thru-Price
limit. This destination could still be ARCA, or it
could be INET, or one of the other of the listed destinations,
so long as they all have the best offer price currently
quoted.
- INET fills an additional 400 shares (partial fill)
at the selected Thru-Price or better, and then the
remainder of 400 is immediately canceled. The SWIPE
process is repeated, until either the order is filled
in its entirety or the best offer price as quoted
by the execution destinations moves outside of the
Thru-Price level set by the trader.
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