The Saga of the PL Select Order
You may recall last year at this time we highlighted a controversial order type created by NYSE Arca called the NYSE Arca PL Select Order. We originally discovered this order type while doing our regular review of SEC filings from the stock exchanges and couldn’t believe an exchange would actually file for this type of order. We feel that the NYSE Arca PL Select order is a discriminatory order since it is designed not to trade with certain types of contra side orders. In their original filing, NYSE Arca stated:
“a PL Order that would not interact with an incoming order that: (i) has an immediate-or-cancel (IOC) time in force condition, (ii) is an ISO,or (iii) is larger than the size of the PL Select Order. “
We have continuously followed up on this order type over the past year highlighting the objections of a major institutional investor and also highlighting the fact that NYSE Arca themselves ran into a complication with the order type . Last December, NYSE Arca stated:
“Based on the few weeks of experience with the new order type, the Exchange has identified an unintended business consequence in connection with the fact that PL Select Orders do not interact with incoming orders that are larger than the size of the PL Select Order.”
Well, the saga of the NYSE Arca PL Select Order type continues. NYSE Arca apparently has had a change of heart. They sent out this Trader Update last week:
” Beginning the week of Monday, August 5, 2013, NYSE Arca Equities will no longer prohibit interaction of any resting PL Select order with contra side interest larger than the PL Select order.”
We’ll consider this a small victory. It would be a much bigger victory, if NYSE Arca had scrapped the entire order type instead of just a portion of it. But at least it’s a start.
We think this saga proves that the only way to get the exchanges to change some of their practices is for market participants to speak up about discriminatory and unfair practices at the exchanges. We’ll continue doing our part in highlighting these issues and we hope that you continue to let your voice be heard.