While I certainly don't attribute it to any sort of slight of hand, the definitions are a bit oversimplified. First of all, recall that most institutions, whether hedge funds or any of the other types of entities I mentioned previously are very rarely broker-dealers themselves. Therefore, broker-dealers transact for them.
So when you see ABCD (a broker-dealer) indicating that he wants to buy 100,000 shares of XYZ, it could be that ABCD wants it for it's market making or proprietary inventory account;
or, that ABCD is acting on behalf of an institution it transacts for ("the JKL fund");
or, that ABCD has been asked by broker-dealer DEFG for its' proprietary account; (etc.)
As I said, just because ABCD's MM seems to be a buyer, don't think that a sudden 100,000 Super Offer IOI on AutEx by ABCD means he's suddenly changed his mind or that he's really been a secret seller all along. It could be that ABCD's MM is in fact a buyer, and that the "JKL fund" wanted to sell 100K shares, so they called ABCD Asset Management with the order and it's being broadcast. When and if someone said they wanted the 100K shares, THEN the ABCD MM would get the order.
The only limit to the number of permutations are found within the SEC and NASD's restrictions on "interpositioning," which roughly and basically means running a trade through a number of counterparties with no cost or execution improvement generated for the customer, but with the effect of incremental commissions, markup, or slippage to the customer.
Dan - does that cover it? Did I miss the issue you were asking about?
LPS5
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