The Prop Trader's Chronicles: Short-Term Proprietary Trading Strategies for Both Bull and Bear Markets

NASDAQ OMX PSX (NQPX)—FORMERLY PHILADELPHIA STOCK EXCHANGE

The other exchange acquired by the NASDAQ OMX Group and given a needlessly convoluted full-form name is the former Philadelphia Stock Exchange, now known as NASDAQ OMX PSX (or NQPX for short) under the NASDAQ empire.

Relaunched in 2010, three years after the initial acquisition, NQPX offers a very unique feature that differentiates it from all the other publicly displayed ECN venues in a way that's not just another pricing model copycat: NQPX offers price-size priority order matching rather than the traditional price-time priority.

On any other displayed ECN venues that exist as of this writing (in other words, on any of the other ECN names introduced up to this point), the traditional price-time priority dictates that orders are posted on a first-come, first-serve, basis. If Trader-X posts 5.000 shares on the offer on Arca, and then Trader-Y posts another 7,000 shares on the same level on Arca, Trader-X's shares will execute first when a liquidity remover comes along and buys from the offer on Arca. In this example, this is a particularly significant issue in a scenario where the subsequent buyer may be buying a total amount smaller than Trader-X's offer, so the worst case scenario of missed opportunity for Trader-Y is that a buyer buys less than 5,000 shares before the market moves down in favor of sellers or short sellers. Effectively, the traditional ECN's price-time priority model works like a lineup. The first liquidity ...