# Does Chi-X offer stocks not traded on ASX?



## helpme (17 March 2017)

I read that Chi-X provide trading for all stocks that are available on ASX. Does Chi-X also provides trading for stocks that are not listed on ASX? If Chi-X offers stocks that are already available on ASX, why do we need both ASX and Chi-X? Why the duplication?


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## Trembling Hand (17 March 2017)

Competition.


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## helpme (17 March 2017)

Trembling Hand said:


> Competition.




Does Chi-X offer anything extra over ASX besides competition which is a good thing, of course? What do I miss out if my stock picks are limited to ASX only?


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## Roller_1 (18 March 2017)

helpme said:


> Does Chi-X offer anything extra over ASX besides competition which is a good thing, of course? What do I miss out if my stock picks are limited to ASX only?




If you are buying and selling on the open/close, ASX is the better option because from my understanding Chi-X doesn't have a opening/closing auction. I could be incorrect though...


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## OmegaTrader (18 March 2017)

Chi-x is supposed to be for the big boys who don't want to be front run in the lit market place.
Most brokers run their orders through chi-x to get the best execution anyway.

The whole point is to not show the orders so that other players don't know what is coming.


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## helpme (18 March 2017)

OmegaTrader said:


> Chi-x is supposed to be for the big boys who don't want to be front run in the lit market place.
> Most brokers run their orders through chi-x to get the best execution anyway.
> 
> The whole point is to not show the orders so that other players don't know what is coming.




Is Chi-X some kind of dark pool? No wonder sometimes when I place a trade, liquidity suddenly appear even though it is not reflected in the bid-ask queue. 

Would you know if there are any advantages for retail investors to use Chi-X?


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## OmegaTrader (18 March 2017)

helpme said:


> Is Chi-X some kind of dark pool? No wonder sometimes when I place a trade, liquidity suddenly appear even though it is not reflected in the bid-ask queue.
> 
> Would you know if there are any advantages for retail investors to use Chi-X?




Most brokers are already include it in the best execution etc.

It depends if it is worth it, why pay/ get for access to it unless you are specialised or have big volume. It also depends on the strategy you are using.

I am no expert, other people would no more details about it.

The big concern is arbitrage based on the time lag or difference in the market place and also between dark pools etc . Some people say it is wide spread others that it is minimal/ no difference in price.

I know from my limited experience that the fast players can see an order through chi-x by a broker and then jump in before the order arrives on the lit market. It took me a while to work out how the orders were arriving before mine?? It is not arbitrage but it definitely is worrying. 

It seems a bit unfair that most people don't really know this and that certain players are paying the exchange to get  faster access.

However spreads are usually quite small in comparison with the brokerage paid each way.


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## Trembling Hand (18 March 2017)

OmegaTrader said:


> I know from my limited experience that the fast players can see an order through chi-x by a broker and then jump in before the order arrives on the lit market. It took me a while to work out how the orders were arriving before mine?? It is not arbitrage but it definitely is worrying.



That assumes a lot. For starters that you are trading such volume that its worth front running you. ... i mean *huge *volume.


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## OmegaTrader (18 March 2017)

No its simple.
There was no quotes on the market. I put an order in. Commsec put an order on chi-x first.
On the lit market the algo beat me, that is the algo quote was displayed on the lit market before mine. Which means they saw me coming and can see anyone coming by watching chi-x first then jump in on the lit market.

Try it on an illiquid market on the asx. Put in a stupid quote just for a trial and see the algo order beat you to it.

gg you lose

The point is that the algo has the ability to do it. In my case it was a market maker receiving a rebate and spread to quot. But it showed that it was possible and it would be irrational with that ability to not do it constantly.

All these silly buggers is an erosion of market integrity.


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## DeepState (18 March 2017)

OmegaTrader said:


> .. can see anyone coming by watching chi-x first then jump in on the lit market.




Chi-X is dark?  So how does someone watch Chi-X to get an edge?


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## Trembling Hand (18 March 2017)

Really!? Then what? Some algo has front run you. Whats Mr Algo gonna do now with his $600 of crappy stock that has no liquity? 

And what market makers? There is none.


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## OmegaTrader (18 March 2017)

Trembling Hand said:


> Really!? Then what? Some algo has front run you. Whats Mr Algo gonna do now with his $600 of crappy stock that has no liquity?
> 
> And what market makers? There is none.




They are doing it...
Playing silly buggers. Putting in quotes cancelling them to see where the market is.

How else do you explain the order arriving before mine???

There are  market makers on the asx who get a rebate. But that is a side issue. To the real issue of using speed to effectively front run.


example etc
http://www.asx.com.au/products/equity-options/market-making.htm 
http://www.asx.com.au/products/etf/market-making.htm
http://www.asx.com.au/products/market-maker-arrangements.htm


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## OmegaTrader (18 March 2017)

An older article.

http://www.abc.net.au/news/2012-04-11/kohler-high-frequency-trade-parasites-at-heart-of-asx/3943052


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## Trembling Hand (19 March 2017)

OmegaTrader said:


> They are doing it...
> Playing silly buggers. Putting in quotes cancelling them to see where the market is.
> 
> How else do you explain the order arriving before mine???
> ...




Mate

They are for derivative products, they are needed - always have been but that is not on stocks. They have nothing to do with what you are talking about. So that just doesn't back up what you are saying and still leaves the problem that if there is this magic algo that front runs you what next? after he has magically got ahead of you in a stock????

And that Kohler article is *utter rubbish *and a beat up for the punters. They are the servers for the very same option market makers that you have linked to in your post. They have a need to be co-located because they have a requirement to offer a market all the time and its only fair that they are given the best way to price their products. Where would you and Kohler have them placed?

That fool Kohler has made up or too stupid to know what they are doing there. Then has just filled the rest of the article with assumptions and out right BS. This paragraph,



> What do the computers and their algorithms do? Well, as my relatively low-frequency brain can understand it, these machines constantly monitor order flow into the ASX servers, and the sophisticated programs can pick up patterns that indicate when a reasonably large order has been placed. What they then do, in effect, is "front-run" – that is, they buy ahead of the order and make a small spread selling into it.
> 
> In other words, by operating at the speed of light they can "feel" a buy order coming and can dart in front of them and ensure that the buyers pay a little bit more than they were going to, without noticing a thing.



Is just a stunning bit of drunken pub talk turned into journalism. Its just BS. But because its there people say its true. If you actually care about trading you would see it too as the made up rubbish it is.


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## skc (19 March 2017)

OmegaTrader said:


> No its simple.
> There was no quotes on the market. I put an order in. Commsec put an order on chi-x first.
> On the lit market the algo beat me, that is the algo quote was displayed on the lit market before mine. Which means they saw me coming and can see anyone coming by watching chi-x first then jump in on the lit market.
> 
> ...




Chi-X is not dark pool. Orders are visible by all market participants who pays for Chi-X market data (and with the right broker). Crappy 1990s brokers like Commsec are crappy and backwards for many reasons... Chi-X being one of them.

And what you've described in NOT what happens when you put an order in Comsec. Let's say the current bid/ask is $2.00/2.01, and let's say you simply place buy @ $2.00. I bet you that Comsec will simply place a buy order @ $2.00 on the ASX, it will not go to Chi-X first. I have seen literally no instances where ASX has a $2.00 bid while Chi-X has a $2.00 ask. Other orders (@ $2.00) may join Chi-X after your order is placed, but they are not front running you. They are simply joining another queue. 

If you choose to cross the spread and place a buy @ $2.01, Comsec may place a buy order on Chi-X first, scooping up the liquidity there first before going to ASX with the rest. Now whether you are better off depends on liquidity on either exchange. Say there are 15,000 on the ASX, and there are 7,000 on Chi-X. If you only wish to buy 10,000 shares, going to Chi-X first will make no difference. But if you wish to buy 20,000 shares, using both exchanges will allow you better opportunity of a fill than going to ASX alone.

What may happen however, is that when you hit that 7,000 shares on Chi-X, those 15,000 shares on the ASX may be hit by someone else, or they may be withdrawn, either manually or by algos. This is perfectly legit - when the shape of the market depth changes, market participants (again, be they algos or humans) react. It doesn't mean they are trying to front run you... They don't know how many more shares you may or may not wish to buy on the ASX after you get your 7,000 on Chi-X. It may be 0 or it may be 80,000. Perhaps they were waiting at $2.00 but now decide to cross the spread and get the fill @ $2.01. This kind of rapid changes happen every time a stock moves a tick, and it happens whether Chi-X exists or not.


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## OmegaTrader (20 March 2017)

1) Put in an stupid order to not get filled on a eto option with no liquidity

2) watch the order book

3) the market maker order will arrive on asx before yours

How do you explain that???

That is my experience. I don't know how, but it happens. The price has not moved etc that is not the driver.


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## Trembling Hand (20 March 2017)

Oh boy!

Do a video capture. I'm sure lots would love to see this process?


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## Trembling Hand (20 March 2017)

And hold on. 


OmegaTrader said:


> No its simple.
> There was no quotes on the market. I put an order in. Commsec put an order on chi-x first.
> On the lit market the algo beat me, that is the algo quote was displayed on the lit market before mine. Which means they saw me coming and can see anyone coming by watching chi-x first then jump in on the lit market.
> 
> Try it on an illiquid market on the asx. Put in a stupid quote just for a trial and see the algo order beat you to it.




Now you are talking about ASX options. You started saying that that algos can see your stock orders coming before they arrive in the order book?


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## OmegaTrader (20 March 2017)

Trembling Hand said:


> And hold on.
> 
> 
> Now you are talking about ASX options. You started saying that that algos can see your stock orders coming before they arrive in the order book?




Next time I will try to screen shot it.
when I put the order, then the mm then my order.
That will be a long time away though.

That is the only theory I could come up with, some kind of fore warning by looking at chi-x or something else and then extrapolated that to the market and from what I have read .

Otherwise how is that explainable.


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## skc (20 March 2017)

OmegaTrader said:


> Next time I will try to screen shot it.
> when I put the order, then the mm then my order.
> That will be a long time away though.
> 
> ...




Are you talking about order at the same price? OR a superior price?

So you send a buy order via Comsec for ETO... say 500 @ $7.50. Do you see a market maker jump in front of you @ $7.50 or $7.51 (or higher)?


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## DeepState (20 March 2017)

Does Chi-X even trade ETO?  They trade warrants, ETFs and ordinary stock....but not ETO to my understanding.  So what are these MM peeking at?


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## OmegaTrader (20 March 2017)

skc said:


> Are you talking about order at the same price? OR a superior price?
> 
> So you send a buy order via Comsec for ETO... say 500 @ $7.50. Do you see a market maker jump in front of you @ $7.50 or $7.51 (or higher)?




there is no market on long term index eto.

No orders, no prices, no one trades it. View more of along term investment to take advantage of current option prices or longer term view etc. This means lesser distortion.


so I put in a quote to see the prices

Then the mm quotes to capture the spread on top of the   their fair value of the option calculation 

their quotes come in before mine hits the market.

Mine stays there but the MM adjusts for small changes in the index price by cents in microseconds and then a pulled about 2 mins or so etc So they can still get their benefits for quoting

The point is their quote hits before mine.

How is the question. They must be able to see something I can't. I hypothesise it was chi-x along with some kind of tracking etc.


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## Trembling Hand (21 March 2017)

OmegaTrader said:


> their quotes come in before mine hits the market.



How the hell do you know? You would have to have micro second time stamps on the order book quotes and a way of capturing it.

Or your data is dodgy.


*Or a more likely explanation considering your trading an unqouted product.* (though I would still want to see a vid) is that ASX has delays set for MM products without any orders to safe guard people from themselves. What I could imagine is if there is an unquoted product the ASX will not allow any orders into the book until the MM algo has provided best bid/ask quotes based on their pricing. Then the ASX can pass the order through its allowable price filters. and if they pass put them into the order book.

100% acceptable market practice to save erroneous trades and nothing to do with BS front running you are talking about.


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## Trembling Hand (22 March 2017)

Omega surprised you haven't got anything to say about this?


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## OmegaTrader (22 March 2017)

Trembling Hand said:


> Omega surprised you haven't got anything to say about this?



sorry ,

Yeah sounds more plausable

I still think there is silly buggers somewhere though.


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## cutz (18 April 2017)

OmegaTrader said:


> there is no market on long term index eto.
> 
> No orders, no prices, no one trades it. View more of along term investment to take advantage of current option prices or longer term view etc. This means lesser distortion.
> 
> ...





Hi.

When you place your ETO order on the Comsec platform, a Comsec dealer will normally request a quote for you ( if no quotes are showing ) before approving your order, this is what you are seeing, also last time I checked aussie ETO's only trade on the ASX.


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