Sunday, October 24, 2010

Stock Quotes

The recent increase in trading volume in ITKG stock has spurred numerous inquiries about large spreads and apparent poor fills. Given the ITKG trading volume this week, we feel it is worth revisiting a topic we covered a few months ago in the Company Corner.

Over the last several months, several market makers, most notably Knight, have chosen not to publish their bid and ask on the OTCBB quotation system. Instead they are posting on the Pink Sheet OTC Market combo system. As a result, depending on who you get your quotes from, you may not be getting an accurate bid/ask. For example, Yahoo quotes only include the OTCBB quote system, which does not include Knight and several other market makers. So, if you use Yahoo for quotes, you are not receiving accurate information. I only mentioned Yahoo because it is widely used, but most quote systems are not currently reporting an accurate bid/ask. By the way, this applies to all OTCBB stocks, not just ITKG.

Until your quote system makes the appropriate changes to include both systems you can use which currently provides live bid/ask from both systems. The last trade on this system is delayed and the level 2 only includes the market makers from the Pink OTC Market.

It is important to note that most, but not all, trading desks operate using a consolidated system which takes in to account the best bid/ask from the two systems combined. It is possible though that a trading desk is not operating under a consolidated system which makes it possible for a market order to fill at a price other than the best bid/ask. To avoid this problem, it is best to use limit orders and avoid market orders.

Doug B.