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Non-Tech : Meet Gene, a NASDAQ Market Maker -- Ignore unavailable to you. Want to Upgrade?

To: Perry Ganz who wrote (16)	7/26/2000 1:06:39 AM
From: LPS5	Respond to of 1426

Gene - please add to this as you may find worthwhile for Perry's question. After the close yesterday (7/24) a trade went off for 1.1 million shares of QCOM I was wondering if you could tell us what generally happens on a huge trade like this. Here are two links where I describe some of the ways that large orders are handled, and the rough processes involved: Message 13204787 Message 13334076 I read that the trade was done at the average price of the day, can you guys do that? Yes. There is a new ATS (Alternative Trading System) called eVWAP which operates in such a manner that it allows traders to agree on a number of shares to trade at the beginning of the day, and whatever the VWAP (volume-weighted average price) winds up being at the end of the day is where the agreed-upon amount of shares are crossed at; a sell and a buy, for x shares, at that price. VWAP is also the benchmark for "good" executions, and some large block desks stand behind that performance criteria to a point where they'll eat the commission price on orders that run over the VWAP to some extent (shares and/or price) OR, in other cases, will print as much from inventory as possible to stay under VWAP. So, when you see a large trade such as the one you described, it could be a skillful execution, it could be the printing of an eVWAP cross, or it could be a print out of someone's inventory. Lots of possibilities- LPS5

To: Perry Ganz who wrote (16)	7/26/2000 6:16:53 PM
From: gene_the_mm	Read Replies (2) \| Respond to of 1426

REGARDING BLOCK TRADES... Block trades like the one you mentioned are usually executed by the largest institutional firms. They receive the order from the institution quite a bit before the market-on-close or VWAP print goes off, so for the most part that firm would not be going at risk on much, if any for that customer. As far as other market makers knowing about that order that is an absolute no. It would be ILLEGAL for an MM to know about another MM's orders (in other words if the MM's collude and share information about customer orders) and it would disadvantage him and his customer if they did know. However, it is the job of a market maker and a day trader to predict what is happening in a stock and try to go at risk and make money based on those assessments. At the same time it is the MM's job to make sure his customers are taken care of and the MM will have to compete on behalf of these customers versus the other buyers. Therefore, MM's will TRY to determine what is going on in a stock (that is his job) and hopefully not 'blow himself up' by taking too much risk. It is a tricky business and not for the feint of heart, that I can tell you for fact. Thanks for the questions, -- Gene