LOL. You think it will just happen overnight? Don't people who are going to program their systems to take advantage of this need to open accounts and write their algorithms and start testing? I didn't really think we'd see much difference for a couple of months.
You recon there will be an influx of algo-traders, trying to earn rebates?
I'm not so sure. Even with sufficient proficiency in programming, it is still hard do design an algo that posts limits with an high probability of execution. Blindly posting limits in between the spread will probably result in too high opportunity cost.
Such an algorithm would also require a low latency connection. When you have to do, for example, multiple cxl-replace operations in the inside market, a normal consumer-level internet-connection will most likely be too slow. This is almost high-frequency trading, im not sure how many people will really be able to take advantage in this manner on the MB platform. I guess for most clients this will more or less be a commission-reduction, when they get paid for limits they would have posted even without this incentive.
Such an algorithm would also require a low latency connection ... multiple cxl-replace operations in the inside market, a normal consumer-level internet-connection will most likely be too slow. This is almost high-frequency trading
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I think this is the head of the nail. The placement coding is not too hard (assuming a decent fast-event API from the broker). But knowing your own book right can be a challenge if the cancels or modifies don't get back right away or are sometimes "too late" when the algo assumes they're timely.
I guess for most clients this will more or less be a commission-reduction, when they get paid for limits they would have posted even without this incentive.
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I don't know the financial details of ECN provider contracts, but my sense is that this might be a little like "debit or credit?" transactions in retail.
For many retailers, debit costs less than credit, and, by default, they'll run a bank card as debit. It could be (again, I don't know for sure) that if MB gets a fair chunk of the liquidity they need to show from their own clients, the 2 deci's they pay to the limits might be cheaper than what they have to pay to the banks providing size to the ECN.
Again, speculation; I don't know. But you're right, I believe, in that there is not going to be a sudden springing-up of "mini dealer" liquidity providers. Even if the money's good (and it looks like it is), the op risk looks pretty substantial, at least from here in the cheap seats.
