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Earl
-- (edited) content of email reply email from marketreg@xxxxxxx --
This week I was charged $1.20 to cancel a GTC for 1 SPX Dec 03 1075 Put at
$155 limit which had been working for a week. I will not be placing any more
GTC orders since it is less costly to use Day orders which expire at the end
of the day. Also, I am no longer leaving limit orders in the market since
any order adjustment or cancellation is subject to the $1.20 charge.
Had the above order been executed, I would have paid total brokerage
commission and fees of $1.00 ... $0.20 less than the order cancellation fee.
There is no way that the exchanges can justify charging a cancellation fee
of $1.20 based on allocated or incremental costs, which it is my
understanding, the SEC requires be considered when exchanges levy fees and
charges. This is flat out an egregious charge which is going to result in
sharply reduced liquidity.
----- Original Message -----
From: "Ray Raffurty" <r.raffurty@xxxxxxxx>
To: <realtraders@xxxxxxxxxxxxxxx>
Sent: Wednesday, April 16, 2003 6:57 PM
Subject: Re: [RT] Option order cancellation fees
Hi Earl,
Would you post the letter you sent with the address so we all could send
one. Strength in numbers, workers of the world unite and all that rot.
Thanks in advance,
Ray Raffurty
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--- Begin Message ---
To: <marketreg@xxxxxxx>
Subject: Option Exchange cancellation fees
From: "EarlA" <earl.a@xxxxxxxxxx>
Date: Sat, 12 Apr 2003 19:25:42 -0600
Dear Regulators,
I am writing to you to contest the ORDER MODIFICATION and CANCELLATION FEES
imposed by all U.S. Options Exchanges. I want to inquire regarding the
legitimacy of the fees and to know if the fees need to be or have been
approved by SEC, when they apply to individual investors. My opinion is that
the fees are illegal according to federal securities and exchanges laws for
the simple reason that they do not charge transactions that actually happen,
so there is no log available, nor any guarantee. There are many unanswered
problems and unanswered questions associated with these new imposed fees.
Let's remember some:
1) what about free visibility of customers' orders and market manipulation?
Do these fees obscure customers' and investors' orders, hiding visibility
costs and manipulating the options' spreads?
2) What about logging of all order cancels? Assuming that a MODIFICATION OR
CANCEL is expensive as an execution or more, customers' should be guaranteed
a fair logging of their activities, and all options markets and
brokers/dealers should be forced to provide customers and investors all logs
and references to their activities and fees. As they actually do for
executions.
3) What about reliability of order cancels? Among the primary slippage
activities of options market makers and specialists there are ORDER
MODIFICATIONS and ORDER CANCELLATIONS, that are not guaranteed and not
reliable by definition. How can markets CHARGE customers a FEE for THEIR OWN
BEST BUSINESS? How reliable are those cancellations so far? How customers
and investors are guaranteed about reliability and speed of cancellations or
modifications? Many traders have lost several thousands US dollars on late
cancellations, postponed cancellations or cancelled cancellations, or
slippage and all other typical specialist activities. Why do customers have
to pay a fee if they don't receive in exchange more reliability and
guarantees?
4) What about the CURRENT AMOUNT of cancel/modification fees? 1.20 USD for
each cancel is GREATER than a small fill commission of $1.00 per contract
charged by my broker, Interactive Brokers LLC. Is there a limit on this? On
what basis has the amount has been chosen? On what basis will the amount
increased/decreased in the future?
I would also like to report that the exchanges and brokers who charge the
fees to the clients do not provide detailed traceable billing statements
including the time, order information, and amount of the fee for each item.
They only provide a total amount on daily or monthly bases. We, the
investors, may not be able to keep track of what is really going on,
furthermore considering current problems about internet security, this
currently offers new ways for hackers to destroy customers' accounts.
I ask for your immediate help, investigation, and response on these issues.
Thank you very much.
Regards,
Earl Adamy
--- End Message ---
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