Thank you for the welcome!
I only hope that my last two posts and the subsequent lashings I received are the end of the "initiations", however somehow I doubt it!
Porter, I read with interest your subject on client priority and it reminds me of the same thing that was fought over during the late 80's when I was trading with an arb house. Let me explain, I worked for a firm that had its arb arm based in the U.S., and the firm in Canada only cleared the trades - so any trades that were done in Canada were charged a commission. The rules at that time stated that if a commission was charged the account was deemed a "client". Although our commissions were very small, something like 2 cents a share, you can imagine the problems, an arb that was really a pro was being treated as a client - it wasn't good.
I really don't think it was the four pillars deciding this, it was brought about because there was to many pros hiding behind the "commission paid client rule" and demeaning something that was orginally set up to protect the clients.
Now on to my point, just what is a client? Someone who pays commission? Someone who trades through a firm, pays the firm a commission or some soft dollar, however is owned by the same firm that executes the trade? The logistics are scary, how can a trader tell if someone says it is a client order when the end purchaser or seller as the case may be is just another clown sitting at his local machine? This has probably more impact on the trading floor than for myself, however if my recollection is correct, client priority was deemed non-beneficial to the actual clients back then. Reason, everyone was using the client rule to sidestep priority. It seems the same thing is happening in the option market place. If you lose the client priority rule, everyone participates according to time priority - it is so simple.
I can only imagine what goes on the options trading floor now, constant bickering over whether an order is a client and if you get the affirmative, there is no guarantee that it is a bonafide client or some lacky doing a jitney or some such.
V |
