thought you might find this interesting, hopefully useful...from our free email newsletter (tdesk@yamner.com subject:subscribe)
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Lessons from the Trenches:
"If, and, and butts"
On the Street, there are exact terms and phrases which have clear and defined meanings, which should be understood by the investors. Most are terms which are well known on the street and often have variations and derivatives all with significance. Over the next several weeks we shall explain many of the most common and more intricate phrases.
This week we shall deal with TIF, "Time In Force" qualifiers. There are a few: DAY, GTC (also known as Good Till Cancel or an "Open Order"), and GTD (good till day). There is a fourth, less utilized TIF called GTT (good till time).
For record, few firms (including Yamner & Co., Inc.) support GTT or GTD orders given the propensity for errors and omissions, let alone misunderstandings.
These qualifies define the life of an order. That is, the order should remain a valid and good order until it is either cancelled or expires based on the time in force qualifier.
GTT - Good till time. Exactly the way it sounds, it defines when an order, during the current trading session should expire. For example, one might say "Buy 2000 AOL at 45, good till 3pm". At 3pm, if the order has not executed, it should expire. Because few electronic systems take such orders, it is not often utilized and is rarely supported.
GTD - Good till Date. This qualifier specifies that an order should remain open until executed or the close of business on the date provided. For example, "Buy 1000 AOL at 45 Good till Friday 01/25/2000". Again, this is rarely utilized nor supported.
The most common time qualifiers are DAY and GTC (or "Open") orders.
DAY - By default, all orders given on the Street are DAY orders. That is, unless executed, they expire at the end of the current trading session. After the markets close (varies on markets and definition of the word "close"), the order, if not executed expires.
GTC - a Good Till Cancel order means exactly what it says. The order remains open until the investor cancels the order. This could, theoretically, remain perpetually on the books of the brokerage firm. That said, firms have quarterly responsibilities to verify GTC orders for certain clients.
The caveat here is that many investors and most brokerage firms also use the word "OPEN" to describe a GTC order. "OPEN" to most retail investors would mean "good" or "active". "Yes, my order to Buy 1000 AOL at 55 is open. I gave it this morning and it should expire at 4pm today if not executed". In that context, the word open is used to describe the executed, unexecuted status of the order. Yet, used differently in the sentence, it has an entirely distinct meaning.
"Open Order, BUY 1000 AOL 45". This is a GTC order. It means to BUY 1000 AOL at 45, Good till cancel. Like any fast paced, exacting environment, the Street eliminated 2 words and simply uses the word "OPEN". This is not uncommon and in fact is often more supported that the more lengthy "good till cancel".
It becomes even more interesting when you start to involve modifications of orders. Such as when you might want to call and change the price on a listed order. Lets say you have an order to buy 1000 AOL at 45 and you want to change it till 50. You might call and say "Change my open order to buy 1000 AOL at 46 to 50". That?s trouble in the making. The specialist might start looking in the specialists GTC files, and may come back and say "No order".
More accurately, you should say "DAY AROUND, BUY 1000 AOL at 50, cans 45". Quite, accurate, to the point. We shall get into verbiage in later emails but you can also find phraseology on our website at yamner.com
If you were infact changing a previously given GTC order, you might say "OPEN AROUND, BUY 1000 AOL at 50, cancels 46".
The OPEN AROUND and DAY AROUND tell the contra party (broker, dealer or specialist) that you are "going around" on an order, doing a cancel-replace.
If the contra party is familiar with your order and infact you want to buy an additional lot at 50, without canceling the 46 bid, you might say "BUY 1000 AOL 50, no cans".
Stayed tuned for more????.. |
