Misinformation about MicroStrategy securities is rampant on social media, and a claim about an incredible delay in purchase orders for the company’s Strife (STRF) is the latest, egregious example.
According to Josh Mandell, the $6 trillion asset manager and brokerage Fidelity didn’t fill his market buy order for STRF for over seven minutes.
Moreover, in his dubious view, the actual best offer that Fidelity quoted to him could not be real and, due to the ostensible delay, “is obviously higher than quoted.”
If true, the reasons for such an extended delay would have had more to do with how stock markets function than MicroStrategy, its founder, Michael Saylor, or the company’s preferred stock.
A market buy is an exchange-regulated order to a broker to immediately fill a specified number of shares at the best available prices among prevailing offers.
However, exchanges only set rules on the orders that brokers accept during their hours of operation.
Unlike digital asset markets, stock markets like NasdaqGS, which lists STRF for trading, don’t allow around-the-clock trading.
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What type of MicroStrategy market buy order?
If Mandell used Fidelity’s retail brokerage to buy the MicroStrategy preferred shares, NASDAQ would require that brokerage to fill Mandell’s traditional market buy order during regular trading sessions — typically 9:30am to 4pm New York time, Monday through Friday.
Many brokerages also accept so-called extended hours market buy orders, which are distinct from regular trading session orders and labeled as market buy orders by the brokerage for convenience only.
During morning (4am to 9:30am) and evening (4pm to 8pm) extended hours, buy orders can fill at prevailing offers with substantially thinner liquidity, much wider bid/ask spreads, and no mandatory market-maker tasked with orderly bids and offers.
Moreover, some securities don’t trade full extended hours sessions.
Finally, outside of extended hours, exchanges don’t require brokers to fill any market buy order whatsoever. Before 4am, after 8pm, and on the weekends, the exchange is closed entirely and doesn’t allow shares to transact.
This is likely the time during which Mandell placed his order, with many people pointing out that the timing of his post was outside of regular trading hours.
Eventually, he even admitted as much, saying, “information value of this post = ZERO.”