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Gold/Mining/Energy : Daytrading Canadian stocks in Realtime
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To: keith massey who wrote (17532)6/23/1999 7:41:00 PM
From: the Chief  Read Replies (1) of 62347
 
Crosses.........Brokerages will initiate crosses fro a number of reasons;

1) to facilitate a large client purchase
2) to establish a capital loss or gain level
3) to "pad' a losing fund that the brokerages bank controls
4) to remove deadwood from a losing fund that a bank controls

You'll never know if it is #1-4 but if you look at 1&2, they establish an acceptable baseline for the assumption of a "floor" for a stock. The cross, if done at a forced lower level, is probably as a result of #1....giving the client a buffer for profit almost immediately. The brokerage after doing the "cross" will then buy into the sell volume, that is created by their own downdraft, thereby replenishing their own account while controlling the price rise. #2 is normally done when the brokerage is sure the stock is "turning around". The difficulty is knowing which way it is going to turn. If the cross is done between the same brokerage (ie Cannacrap sells...Cannacrap buys) then it is likely establishing a purchase/sell price that will be recorded as the Capital gain/loss level. If the cross is done between two brokerages, then it may be an "active" short sell by the selling brokerage and if so....they are going to try to push it south! Of course, the buying brokerage is going to try to prevent the short sell working...so.....he with the most coin wins! A second cross of the same # of shares at a lower price "can be interpreted as a short cover...but maybe they are just establishing another floor level...and the first cross was just a normal trade????? Confusing eh what!!!

#3,4. When you buy a mutual fund and six months later you find out you are down 6%...you are not a happy dude/dudette. Well neither are the fund managers...so they'll swap stocks within 2 funds. Fund A is down 6% and has a dawg called XXX-T. Fund B is up 12% and can afford to suffer some minor losses if it buys XXX-T from Fund A. So the brokerage crosses XXX-T at a given price. Fund A shows a capital loss on record for the year. Fund B picks up the dawg at a suppressed price and if it rallies shows a higher return for the year....if it falls, then Fund B may only show a 10% return instead of a 12% return.

The same also occurs if Fund B has a winner and it looks like it will continue to win. Fund B sells the winner to Fund A. Fund A takes on the stock at a price that establishes its baseline for that stock. Fund B establishes its sell and establishes its "capital gain" for that stock.

the Chief
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