Q. What stocks can I trade in Pipeline?

The Pipeline universe - over 6,000 names - includes all stocks in the Russell 3000, and of course the S&P 500, the Nasdaq 100 and select ADRs and ETFs. For a complete listing, please refer to our symbol list.

Q. Which stocks trade in 10,000, 25,000 share blocks and which ones trade in 100,000 share blocks?

For issues most actively traded in the national markets (ADV exceeds 5 million shares) the block quantity is 100,000 shares. For less liquid names (ADV less than 500,000 shares) the block quantity is 10,000 shares. For all other names the minimum block quantity is 25,000 shares. To check a specific stock, please refer to our symbol list.

Q. What is the BPR?

The BPR is the “BlockPriceRange.” This represents the range of prices a trader might see in the process of working a 100,000-share (or 25,000-share) order on the continuous market. This range is updated once per minute, and is normally wider than the NBBO spread, reflecting that fact that institutional-sized liquidity is not typically available at the inside market. The BPR is used to determine which orders are within a reasonable price range of the current market.

Q. What does it mean when a symbol is orange?

An orange symbol on the Block Board means that at least one trader has entered a large, reasonably-priced order into Pipeline’s hidden book. An orange symbol does not indicate whether the first order in was a buy or a sell – it simply lets you know that there recently has been serious trading interest in that symbol in Pipeline.

Q. How can I add a symbol to the Block Board?

To add a symbol to the Block Board, simply enter a firm order. Pipeline will automatically add the symbol to the Block Board and turn it orange. If you just want to see the BPR and Pipeline Reference Price for a given stock without entering an order, just select the symbol from the drop-down at the top left of the Block Board. When another party enters an order in a stock, it will automatically be added to your Block Board.

Q. What is the Pipeline Reference Price?

The Pipeline Reference Price is typically the midpoint of the NBBO. When markets are locked or crossed, or in rare circumstances when spreads widen precipitously, the Pipeline Reference Price may be closer to either the National Best Bid or the National Best Offer, but in any case, it will never be outside the NBBO.

Q. How does Pipeline define an aggressive order?

Within the Pipeline system, an order is considered aggressive if it is priced at the Pipeline Reference Price or better. For example, the NBBO for Cisco is $29.49 - $29.51, and the Reference Price is $29.50. A buy order at $29.50 or higher is considered aggressive. A sell order at $29.50 or lower is considered aggressive.

Q. How does Pipeline define a passive order?

Within the Pipeline system, an order is considered passive if the price is less aggressive than the Pipeline Reference Price. For example, the NBBO for Cisco is $29.49 - $29.51, and the Reference Price is $29.50. A buy order priced at $29.49 or below is considered passive. A sell order at $29.51 or higher is considered passive.

Q. Will I be notified if there is a contra present for my order?

The Contra Present is a “one-way” message – the passive trader learns nothing about the existence of the aggressive one. The Contra message is triggered when a passive contra order is limited within the NBBO, but that contra is not willing to trade at the midpoint of the NBBO. The trader who is willing to trade at the midpoint is the only one to receive this message, and the only one to receive the option.

Q. What exactly does the yellow ‘Contra Present’ signal mean?

When you have an aggressively priced order in Pipeline for a given symbol, the symbol will turn yellow to indicate the presence of a passive contra order. Only contra orders priced better than the NBBO will trigger a contra present alert to an aggressive contra party. Once the contra alert is sent, it will remain valid until the passive order drifts outside the BPR. If you decide to “take” or “hit” the contra, your execution price will be at the contra’s limit.

Note that throughout this process, the passive contra does not see the Contra Present signal. That trader has no idea whether there is another order in the system.

Q. Will my order cause a ‘Contra Present’ signal to be displayed?

If you place an aggressive order, your order will not cause anyone to receive a Contra Present signal. If you place a passive order inside the NBBO, any trader with an aggressively priced order on the opposite side of the market would be eligible to see the yellow Contra Present signal. This gives the other party the option to trade at your price, thereby increasing the likelihood you will receive an execution. Both your identity and your limit price always remain protected.

Q. Can I get price improvement in Pipeline?

Yes. Pipeline executes trades as close as possible to the Pipeline Reference Price, which, during normal market conditions, is the midpoint of the NBBO. If your order is priced aggressively, you will receive price improvement to the Reference Price when an aggressive contra order is received, and you will receive all possible price improvement when trading with a passive contra.

Q. At what price does Pipeline execute a trade?

Whenever possible, Pipeline prints trades at the Pipeline Reference Price. If both sides are priced aggressively, they will each receive price improvement, with the more aggressive order receiving more price improvement.

Q. Can I cancel my orders or adjust price limits any time?

You can cancel orders, or reduce price aggression on any order at any time.

Q. If I make a change to my order, will I lose time priority?

Priority Hold allows adjustment to order parameters without losing your place in line. So long as a trader has at least one Pipeline block live in the system, size adjustments can be made without losing your previously-established time priority. If you are first to place an aggressively-priced order - say for 600,000 shares - and later need to reduce the quantity down to 450,000 shares, the cancel-replace operation will maintain your spot at the top of the line. Similarly, price adjustments to your ultimate limit (where the trader is willing to trade at the midpoint before and after the adjustment) can now be effected by Block Board users while maintaining their time priority.