I’ve got an interesting situation. Yesterday morning I placed two orders on the same stock which is a UK listed UK company. The first was a small market order which I placed to try to find out what price it executed at - because we don’t have visibility of bid/offer and can’t get a quote. That didn’t immediately execute so I just entered a larger limit order.
Neither order executed yesterday. This morning one of the orders has executed. Its the larger limit order. The small market order is still sitting there.
I don’t really care. The larger orders executed I’ve got the shares I wanted at the price I wanted. However, its pretty mad that a limit order (for 80,000 shares) executes and a small market order hasn’t executed after 24 hours.
I love T212 and they are developing a great platform. However, before developing lots of extra things I think they need to really get the core trading right.
Obviously I want to know at what price an order will execute
At the moment most of my investments aren’t with T212. For the bulk of my investment funds I want to be sure about execution. I want to ensure that I am getting a good execution price (ideally within the market bid/offer spread). Also very importantly I set limit orders to take profit or to for speculative buy orders at the limits of what I think the price range might be. Often the price will only go into my price range for a short period of time so I want to know that the platform is responsive and my order will execute if the price is hit. A tiny market order sitting for 24 hours unexecuted makes me worried. It is fine if this is a trivial portion of my total portfolio and is simply the price I pay for free trades (no commission) but if I am placing orders worth many £thousands it makes me feel that paying a small commission to get a competitive quote within the bid/offer spread and immediate execution is worth it.
In my SIPP I can get an immediate quote to trade 20x or more the size of my orders on T212. My point wasn’t an issue about this particular order but a general point and it seems ??? (I don’t know what word to insert) that a limit order executes the day before a small market order when both are on T212. The stock is on SETSqx but there is liquidity (current volume is over 250million shares). A lot of trades are off-book but I go back to my point that I place two orders and the large limit order executes a day before the small market order both orders on T212. I wasn’t trying to raise an issue with these specific trades. Rather it just highlights that I can’t use market orders on T212 because I have no idea what price they will execute at and if a market order is going to sit there for 24 hours+ I definitely have no idea what the execution price will be. I do understand that SETSqx can have issues with liquidity and with auctions but that doesn’t explain a larger limit order executing before a market order so the fact these two orders executed a day apart (when placed at exactly the same time) highlights the uncertainty of placing an order on T212.
One of my concerns is that I am looking to put a very large amount of additional money into my portfolio in the next few months and how much do I put in T212 rather than another platform(s) where I might pay a modest commission but will get real-time trade quotes and instant execution.
One of my concerns is that I will place orders at prices a significant distance from the current market price as speculative orders if the price spikes up or down. If an order might sit there for hours even when the limit price is met then it would be a worry. I don’t really care that much if an order for £100 doesn’t execute even if the limit price was reached but I would be concerned if the order was £10,000+.
Lots of the T212 developments that are discussed are cosmetic rather than being substantive development of the trading capabilities/products. Personally I would prefer some focus on getting the trading right (and products such as Options trading).
Thank you for the provided information. I checked your account and want to shed some light on the situation.
The instrument is traded via the SETSqx trading service of the LSE, which is for illiquid stocks to better match orders.
I managed to take a look at the order, and there was a demand for the 80,000 shares, so that’s why the limit order was first filled on the last valid ASK on the exchange. Later on, there was demand for the rest of your shares, and your market order was executed.
So, if the demand matches the number of shares you’re willing to buy, your limit order may go before your market order.
@Bogi.H thank you very much for the reply. I posted in the chat because I wasn’t trying to raise any problem with the actual trades. Both executed and did so at prices I was happy with. The point behind my post was simply one for discussion in terms of the general issue of execution delays and execution price uncertainty.
I really appreciate the explanation of what actually happened. I didn’t expect my limit order to take out the order book and your explanation of what happened now makes sense of the sequence of events.
I do think that there is an issue for T212 to consider. The SETSqx mechanisms do give some frustrations when an order is dependant on the auctions. If T212 has to do that as the only way of supporting free trading then that’s understandable and just something we have to accept. However, I have the option to pay a small commission elsewhere and place orders that are immediately executed including on AIM stock. I want to see T212 grow and flourish but the present limitations (not knowing the execution price and potentially waiting 24hrs for execution) may be acceptable “costs” for reasonable small trades but may put off people who have substantial funds to invest. Thus if there is any way to provide direct market access or put orders through off-book it would be good and would make T212 more attractive to large investors.
This is a good question - others can input but 212 only offer DMA. Direct Market Access. Other brokers offer quotes that can go out to market makers, and other participants which can offer better liquidity, but because they may be off book trades, you might get a better price at the time, but a worse spread (the counterparty needs to make a profit).
I suspect this is what you are raising and is a very valid point if I understand correctly, it’s just the way things work on this platform to keep costs low.
I think there is a significant difference between how the US markets work and, for example, the UK market. So what is true for one market may not be true for other markets.
you might get a better price at the time, but a worse spread
I am not sure what you mean by this. Certainly with two of the other brokers/platforms that I use for large orders I will get a better price and thus smaller spread. For MSFT or NVDA it may not be that different to T212 but for a small cap with a large spread I may end up with a significantly better price and when considering the size of the order it more than pays for the commission. For small caps the orders may be executed off-book within the market price/spread.
So far I have used T212 as an experiment really with a small portion of my overall portfolio. However, in the next few weeks I am going to have some additional funds to put into investments so I have a decision where to put it. For some of the funds its currently an easy decision because T212 doesn’t support some trading - eg Options being one example. This discussion highlights a dilemma. If I’m only considering small trades then T212 is fantastic and, as you say, I end up accepting that uncertainty about execution price or delay in execution are the price I pay for having commission free trading. However, if I am placing larger orders where a typical commission from another broker is still going to be less than 0.1% of the trade value then is paying that worth getting a better price, having a known execution price and having immediate execution (even for a SETSqx stock because I can get it dealt off-book or via a market maker).?
I also tried to make the point that I would love to see T212 grow. It is a fantastic platform for most small investors. However, the point I was making was the limitations may make it unattractive to large investors. I am not saying T212 must change but trying to highlight that trying to accommodate better execution options (providing bid/offer visibility, providing quotes, having other execution routes…) may make T212 attractive to a wider range of investors. Maybe the answer is that nothing can be done without increasing costs but it is (I believe) still important to raise the issue. Maybe there are some things that can be done to improve execution without increasing cost and thus preserving T212’s ability to offer commission free trades.
