NYSE to eliminate "stop orders" from February Nov 17 Investors will not be able to make "stop orders" and "good till cancelled orders" on the New York Stock Exchange and NYSE MKT from Feb. 26, the exchange said, as it looks to reduce risks during choppy trading. A "good till cancelled order" is valid until an investor cancels it or the trade is executed, while a "stop order" allows an investor to buy or sell a stock when it exceeds a particular price. On Aug. 24, people had standing "stop orders" that they thought would protect them, but the shares crashed through the "stop orders" and investors were automatically sold out of positions at prices well below where their "stop order" stood. All existing "good till cancelled orders" and "stop orders" residing on the NYSE book will be canceled, NYSE said on Monday. (bit.ly/1j6vYIc) "We expect our elimination of stop orders will help raise awareness around the potential risks during volatile trading," NYSE spokeswoman said. (Reporting by Subrat Patnaik in Bengaluru and Trevor Hunnicutt in New York; Editing by Sriraj Kalluvila) Read more at Reutershttp://www.reuters.com/article/2015/11/17/nyse-stoporders-idUSL3N13C5NW20151117#fDwDiYeYFfSjJbas.99 Who benefits from this , who loses? Brokers benefit?
Yes cancel them because the poor retail babies don't know how they work. Boo Hoo. http://www.cnbc.com/2015/11/18/why-will-the-nyse-stop-accepting-stop-orders.html Oh, and apparently "professionals" don't use stop orders! What a farce! LOL
Now the stops will just be held at the broker if I understand correctly, so what implications will this have? Slower and uneven execution among various brokers depending on who is the fastest ? I don't trade equities and understand the microstructure in that space very well so if someone could explain , thanks in advanced.
If held at your broker or on the exchange order book, I don't see a material change in the quality of the execution from a stop order. The elimination of true GTC order seem unnecessary. That is not good for the public.
well think about it, as baby boomers become more sophisticated and put in a gtc stop on stocks they have held for decades, the stops start piling up, moreso than any hft or instituitional algo could do, and once those stops are hit that money is gone from the stock market forever.
The solution here is not to remove capability and usefulness for to the end user due to market structure and other concerns. If people want to stampede, they'll stampede - removal of stop orders is probably going to lose retail mindset traders a net higher amount of money than leaving them alone. There's absolutely no way they're doing this for the good of the public - and like @rmorse said, GTC didn't even need to be touched here (there went your long-term profit taking orders).
the article refers to stop orders which when hit result in market orders. it may not include stop limit orders. if not the problem is solved.
I agree...always Follow the Money, as they say. But I could personally care less...i don't use them...automatic Stop Losses are more of an amateur thing, in my opinion.
It looks like the issue with the "stop orders" and "good till cancelled orders" is when the stock crashed through the price indicted in the order they were filled at prices well above/below what they had entered. The trader thought the price they entered would be the price they would get. Some brokers must have had a lot of complaints on August 24. QUOTE