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Schwab Cancels and Games $2.00 executions of FUND shares on 3/12 ?

FUND (Sprott Focus Trust) trades on the NASDAQ market.  FUND is not very liquid; volume averages around 50,000/day.
 
On Mar 12  I placed a $5.01 limit buy order for FUND; I expected shares to trade sharply lower in the re-opening auction.
I priced the order high to assure participation. 
FUND order executed at $2.00 when trading resumed (after the circuit breaker trade suspension).
My Order Status said I had a $2.00 print.   Schwab even sent an email saying my order traded at $2.00.
Schwab deleted the original "order status" trade report later, when I wasn't looking. 
During the day FUND traded above $5.00 at around noon, then down to $4.56.   FUND traded as high as $5.10 at around 1:15.  Then it traded down to $5.02 at 1:20-1:23. 
Schwab re-executed my order at the $5.01 limit price at 1:24 PM according to my trade confirmation.
It appears that FUND never traded above $5.00 after my 1:24 "re-trade". 
Finance.yahoo shows the FUND $2.00 print, about 11,000 shares
My trade confirmation shows only the $5.01 price and the print time. 
Did Schwab expect me to not notice?  
 
What happened? 
It looks like my trade was cancelled, the order was reactivated after 1:15 PM and then traded at 1:24. 
This is where things start to look really bad. 
         If the order had reactivated before 1:10, then it would have traded below $5.01. 
         I think Schwab held the order on their internal order book until the price improved to $5.01. 
         The order became executable and Schwab executed as soon as the price reached $5.01. 
This is GREAT market timing on Schwab's part.   
 
I don't know who CAND the trade or when.   
Schwab has provided no details or explanations. 
I have reason to question the order time stamps.   Odd; how and why would anyone mess with a time stamp?
More than 11,000 shares traded at $2.00.  Were all $2.00 trades CAND? 
Assuming all $2.00 trades were CAND, how were other CAND orders handled by other brokers? 
I notified Schwab in writing that I dispute their trade.  
I want the $2.00 print. 
 
How did Schwab and other brokers handle the FUND orders that traded at $2.00 ?
I would like to compare notes with anyone who had a $2.00 execution for FUND shares on March 12, 2020
I would like to compare notes with anyone who had their $2.00 execution for FUND shares CANCELED. 
You can pm U2DNA (me) at seekingalpha
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Valued Contributor

Re: Schwab Cancels and Games $2.00 executions of FUND shares on 3/12 ?

You mention email transaction notice, so that is a good basis for asking Schwab for explanation.

Here is my guess. Strange things can happen with thinly traded stocks. I looked at FUND chart at Yahoo Finance and it shows a spike down to $2 but Stockcharts shows no such spike down [lowest price shown is $4]. So, exchange may have cancelled $2 trade for $5 stock as erroneous. Then Schwab may have tried to fix that. I think you can argue that you should/could have gotten a price better that your limit order of $5.01, but Schwab may say you got your limit price. 

I found it is hard to fight the broker on limit orders. Once I was with my broker for an hour arguing that my limit order should have executed according to end of day trading range, but the broker said that was from consolidated tape and limit price never hit on the exchange that broker used. At another time, limit price was touched but there was stock ahead. If the amount is huge, you can hire an army of lawyers, etc; else, just complain loudly, threaten complaints to compliance officer, FINRA, SEC, and hope they give you some break.

YBB
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Participant ○○○

Re: Schwab Cancels and Games $2.00 executions of FUND shares on 3/12 ?


@dna2u wrote:
FUND (Sprott Focus Trust) trades on the NASDAQ market.  FUND is not very liquid; volume averages around 50,000/day.
 
On Mar 12  I placed a $5.01 limit buy order for FUND; I expected shares to trade sharply lower in the re-opening auction.
I priced the order high to assure participation. 
FUND order executed at $2.00 when trading resumed (after the circuit breaker trade suspension).
My Order Status said I had a $2.00 print.   Schwab even sent an email saying my order traded at $2.00.
Schwab deleted the original "order status" trade report later, when I wasn't looking. 
During the day FUND traded above $5.00 at around noon, then down to $4.56.   FUND traded as high as $5.10 at around 1:15.  Then it traded down to $5.02 at 1:20-1:23. 
Schwab re-executed my order at the $5.01 limit price at 1:24 PM according to my trade confirmation.
It appears that FUND never traded above $5.00 after my 1:24 "re-trade". 
Finance.yahoo shows the FUND $2.00 print, about 11,000 shares
My trade confirmation shows only the $5.01 price and the print time. 
Did Schwab expect me to not notice?  
 
What happened? 
It looks like my trade was cancelled, the order was reactivated after 1:15 PM and then traded at 1:24. 
This is where things start to look really bad. 
         If the order had reactivated before 1:10, then it would have traded below $5.01. 
         I think Schwab held the order on their internal order book until the price improved to $5.01. 
         The order became executable and Schwab executed as soon as the price reached $5.01. 
This is GREAT market timing on Schwab's part.   
 
I don't know who CAND the trade or when.   
Schwab has provided no details or explanations. 
I have reason to question the order time stamps.   Odd; how and why would anyone mess with a time stamp?
More than 11,000 shares traded at $2.00.  Were all $2.00 trades CAND? 
Assuming all $2.00 trades were CAND, how were other CAND orders handled by other brokers? 
I notified Schwab in writing that I dispute their trade.  
I want the $2.00 print. 
 
How did Schwab and other brokers handle the FUND orders that traded at $2.00 ?
I would like to compare notes with anyone who had a $2.00 execution for FUND shares on March 12, 2020
I would like to compare notes with anyone who had their $2.00 execution for FUND shares CANCELED. 
You can pm U2DNA (me) at seekingalpha

sometimes in extremely fast markets, wacky trades can happen, and end up getting busted later.  they might not have removed that trade from the tape that looks like someone got all those shares at that price.  it doesn't happen often, but over my career its happened a couple of times.  it obviously sucks if one is an arbitrager and (thought) they bought at 2 and then flipped it 4, only to wake up the next day wondering why you a) short the shares and b) had a trade busted.

but if you are getting wildly crazy fills on limit orders in todays market this is a non zero risk, as you are discovering.  

you can complain but i doubt you will get anywhere.  this is one reason why some prefer ibrokers over 'free' trading at other firms.  

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Participant ○○○

Re: Schwab Cancels and Games $2.00 executions of FUND shares on 3/12 ?

I have a related question. I had two limit orders and prices fell well below my limit. Vanguard filled my order at the lower price, Fidelity didn't. I don't think Fido has ever filled my orders lower except by a fraction of a penny. Can they front run limit orders, buy the security then sell it to me? Is that legal?

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Valued Contributor

Re: Schwab Cancels and Games $2.00 executions of FUND shares on 3/12 ?


@DJANG0 wrote:

I have a related question. I had two limit orders and prices fell well below my limit. Vanguard filled my order at the lower price, Fidelity didn't. I don't think Fido has ever filled my orders lower except by a fraction of a penny. Can they front run limit orders, buy the security then sell it to me? Is that legal?


That is OK. They may have been filled at 2 different times when markets were moving differently. Limit order means limit or better.

If the security gaps down in fast market, you can get a better fill than your limit price - consider yourself lucky. It happens but not often.

If security crosses limit gradually with good volume, you will just get a fill at your limit price. After your order is filled, the security may keep moving but you can no longer get better prices.

Another issue is that some brokers keep limit orders with them until they are close to being triggered and then they are released; others release it right away and everyone can see it. This has its advantages and disadvantages.

YBB
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Participant ○○○

Re: Schwab Cancels and Games $2.00 executions of FUND shares on 3/12 ?

@yogibearbull 

Got it. Thanks for the response.

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Follower ○○

Re: Schwab Cancels and Games $2.00 executions of FUND shares on 3/12 ?

The Schwab FUND story is about order handling irregularities and complex rule books designed for the protection of broker-dealers. I concede my FUND trade was probably broken according to an obscure rule in the NASDAQ rule-book. Who knows?

There is a background to the story.
During the period 1996-2001, I traded an extremely illiquid NASD listed CEF. It was long ago; I forget the symbol. There was often no trading volume.
I noticed an odd trading pattern. Opening prices seemed arbitrary and were always in favor of the house. I determined that Broker-dealers probably gamed customers' over-night market orders at the open.
Dealers were always on the other side of any trade, the customers' counter-party, until the best price rule, a game changer. I entered GTC buy/sell limit orders inside the market maker trading range. It turned into a decent business. Market makers, including the one with my GTC orders, routinely traded through my price at the open.

NASD market makers were required to post bid/ask quotes within 30 seconds of the open, aka the Quote Rule. I determined that all of the market makers were taking advantage of the 30-sec free-for-all to the detriment of their customers. It looked like collusion, a gentleman's agreement to delay posting quotes until 9:30:29, after all market orders traded. In those days there was no NASD central opening market auction.  Each dealer could trade without a market quote until 9:30:00. During this time window NASD market makers had license to cheat their customers, and they did. This practice defined predatory trading; NASD would have been shocked to discover this. Alternative hypothesis: These observations were the product of an over-active imagination.

The quote rule meant that my somewhat low-ball GTC bids and offers didn't get posted for 30 seconds.  They never participated in the open.
When the open traded through my order, which was often, I would call my broker (not Schwab) to inquire whether I was due a fill at my limit price, per the best price rule.
The Registered Reps never got the best price memo. They would always try to dissuade me with pseudo-explanation of why I wasn't entitled to a fill. I just didn't understand how the OTC market works. Blue smoke and mirrors. SOS.  Exactly who were these Reps working for?

In the end, if the market maker holding my GTC orders traded through my price, I always got the fill.
The large majority of the NASD/NASDAQ trades I did before 2001 were filled this way.
The size of the business was small but meaningful and profitable. I liked preying on the predators! I probably earned 10% on each trade, 20% per round trip. The order size had to be kept small; if I increased the size, the market maker executed his orders one tick better than my GTC price.
I stopped doing the trade around 2001 for non-financial reasons. One of my ICEFI friends later figured out the trade and improved on my methods. He made a bundle. The trade ended when the CEF became an activism target.

I believe the NASDAQ is almost as crooked today as it was in the late 1990s. The FUND trade proves my point.
Schwab has a history of taking advantage of its CEF customers in subtle ways, as do most brokers. Knowing this history is why I believe Schwab and NASDAQ cheated me. SOS. Schwab is not the worst offender.  As my agent, Schwab should represent my interests.
"Enquiring minds who want to know" can check broker-SEC CEF-related consent decrees going back to 1990. There is a non-obvious historical pattern there. If you were there and paid attention, you know what I mean.
End of Story

Trades like "FUND" may explain how and why Knight Securities (under Pasternak) was so successful - until Knight got nailed. Knight executed bigger and better than Bernie. Madoff was a heroic figure in those days; I credit him with making NASD a better, more honest place to trade - despite his invention (I think) of payment-for-order-flow. His pioneering spirit continues in today's trading shops and markets.  They do payment-for-order-flow and sub-penny markets (that only a smart order router can see). Off-exchange sub-penny orders have turned the BBO into fictitious prices. All traders should be using the same minimum tick size.
end of rant

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Participant ○○○

Re: Schwab Cancels and Games $2.00 executions of FUND shares on 3/12 ?

It's weird, you clearly know enough about this stuff to comment on it, but as a former Series 55 holder I'd say the simple issue is that you are using a retail brokerage platform that is not well set up for fast markets.  You also don't understand how fragmented equity trading is nowadays.  There are multiple markets, both lit and dark, and getting fills you think you are entitled to means you need a broker who can show your flow to all of them.  Schwab isn't that.  What is so hard to understand about that.

CEFs are one of the rare pockets left where voice brokerage still has some value.  The Wallach Beths and their ilk would be the kind of specialists you want to work your orders in that space.

======

I can't add any value via clever/good trading because I have a host of rules that my employer imposes on me.  (and to be frank, mostly I've torched value this last month!)  I just try to lean against sentiment and hope my pain tolerance is higher than others. If you are intra day trading, you should find better tools, which will mean paying something.

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