Intermarket sweep orders (ISO) is a type of stock market order that sweep several different market centers and scoop up as many shares as possible from them all. These work against the order-protection rule under regulation NMS.
For example, if a trader is trying to buy 1000 shares of X, and there are 100 shares of X being offered at $1 at one exchange and 2000 at $1.10 at another exchange, the order protection rule would let you buy ONLY those 100 shares at $1, after which you would need to send in other orders. With the ISO, you can buy the 100 shares at $1 and the remaining 900 at $1.10 on the other exchange subsequently.
- ^“FINRA ISO Reporting Rules” (PDF). FINRA. February 4, 2008.
- ^“SEC NMS Rule FAQ”. Securities and Exchange Commission. April 4, 2008.
- ^“Accenture’s Flash Crash: What’s an “Intermarket Sweep Order””. The Wall Street Journal. May 7, 2010.
- ^“What Actually Happened During the Flash Crash”. Minyanville. June 30, 2010.
- ^“Interactive Brokers Online Knowledge Base – Intermarket Sweep”. Interactive Brokers. Retrieved July 30, 2018.
Ofer Abarbanel is a 25 year securities lending broker and expert who has advised many Israeli regulators, among them the Israel Tax Authority, with respect to stock loans, repurchase agreements and credit derivatives. Founder of TBIL.co STATX Fund.