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Specialists participate as principals in only 25% of NYSE transactions and are required to execute customer orders ahead of their own.
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Nasdaq's system of competing market makers also encourages "payment for order flow," where market makers pay brokers for the chance to execute customers' orders.
The committee has also met with individuals from the companies whose shares are listed on the exchange and with its own member firms that execute customers' orders.
For instance, promptness is one of the dimensions of the duty of best execution, and any deliberate and potentially gameable bumps in either executing customer orders or marking them up would be contrary to this stringent standard.
In October 2011 and August 2012, programming errors caused Nasdaq to mistakenly execute some customer orders below the publicly listed price.
Nice in theory, this rule forbids exchanges to execute a customer order if a better price is available elsewhere.
We predict customer demand on a weekly basis, and execute our menu ahead of customer orders.
This resulted in a barrage of erroneous stock orders, instead of just the 212 customer orders it intended to execute.
You are under pressure - to meet customer orders, finish a project, execute a deal - and nothing.
Another troubling aspect of Nasdaq's plan, some market participants say, is that it could help institutionalize the practice of payment for order flow, where a brokerage firm buys another firm's customer orders and executes them.
Stockbrokers have been accused of front-running by using information about large customer orders to trade ahead of them to get the benefit of a lower or higher price before executing the clients' orders.
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