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Do Level II quotes monitor all trades on all exchanges?

National Association of Securities Dealers Automated Quotations

Do Level II quotes monitor all trades on all exchanges?

Postby dobhailen62 » Sat Apr 13, 2013 12:29 pm

I've noticed some strange things occurring with Level II quotes when using the TD Ameritrade Command Center and viewing low volume stocks. This has happened several times.

Today I was viewing Level II quotes for Wells Fargo preferred shares (WFC-L) and the last trade as well as the highest trade was $1,012. Then I displayed a list of the equities in my account and WFC-L indicated that the last trade was $1,013. When I checked WFC-L as a real time quote, that also indicated the same as level II quotes. My account continued to display $1,013 until another trade finally occurred which was over a half hour later. When I refresh my account display, does it somehow pick up trading information that did not occur on one of the major exchanges?

I know that real-time quotes for applications like msn money, yahoo finance, and freestockcharts.com can be different than Level II quotes since they usually only get their trading information from one exchange. For example freestockcharts.com get its real-time trading information from the BATS exchange only but can be updated later (sometimes hours later) with quotes from other exchanges..
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Do Level II quotes monitor all trades on all exchanges?

Postby delsy89 » Sat Apr 13, 2013 12:30 pm

Level II is essentially the order book for Nasdaq stocks. When orders are placed, they are placed through many different market makers and other market participants. Level II will show you a ranked list of the best bid and ask prices from each of these participants

Level II can give you unique insight into a stock's price action, but there are also a lot of things that market makers can do to disguise their true intentions.

There are three different types of players in the marketplace:

•Market Makers (MM) - These are the players who provide liquidity in the marketplace. This means that they are required to buy when nobody else is buying and sell when nobody else is selling. They make the market.
•Electronic Communication Networks (ECN) - Electronic communication networks are computerized order placement systems. It is important to note that anyone can trade through ECNs, even large institutional traders.
•Wholesalers (Order flow firms) - Many online brokers sell their order flow to wholesalers; these order flow firms then execute orders on behalf of online brokers (usually retail traders).

I am not sure how often or from where TD Ameritrade updates. You may want to ask your trade representative; if I understand your question.
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