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Strategies & Market Trends : From the Trading Desk -- Ignore unavailable to you. Want to Upgrade?

To: Brendan W who wrote (2232)	1/7/1998 6:49:00 AM
From: steve goldman	Read Replies (5) \| Respond to of 4969

RE: Steve, when you trade listed issues during regular hours do you ever route your order to markets other than the NYSE/ASE? I know normally prices are not as good on the Philadelphia, Pacific etc., but I wonder if some issues are more liquid than the primary exchange... Sometimes you CAN do better going to a secondary or third market, even a fourth market (these are technical terms, I am not talking options..ie.1st is the exchange and fourth =instinet,etc.) Lets say I had a less active stock and needed to buy 5000 shares where there weren't 5000 on the nyse, only 2000. I might go a third market makers and pick some up there and then take the piece on the nyse. The key here is that I do it for the best interests of the client, that I as a trader, with experience, trying to do best for xx client, execute it this way. Some firms NONDISCRIMINTORILY route orders to the alternative markets to keep their floor brokerage expense down. Floor brokerage is what the floor brokers charge the firms or the specialists charge the firms for limit orders. After all, you give a limit to buy xyz at 10 points below the bid, the specialist might have to leave it on the books for 3 weeks. He makes his piece also. he don't work for free. On large orders, in a liquid stock, I would 90% of the time go right tothe floor. If it were AMEX, since they don't have a superdot, i would use one of the floor brokers who work for us. If it were superdot, if it were active, lots of volume,I would use superdot since it is the fastest. Yet in there, on a large piece you would have to use discretion as to how much you show at a time. ALSO and most importantly it depends on what the customer tell syou to do. Most customer, buying size, ask our advice....someone doesn't go and buy 10000 GE without asking whats the best way to get it affordably and giving you a bit of discretion in working the trade. You might think it crazy to give your broker discretion, but that is the kind of relationship we develop because we don't make markets, act as principal and always do whats in the best interests of clients. Its an entirely different mindset than what most online, deep discount brokers or even full service (paine,merrill,etc) are used to. Its a rarity. There are so many different factors and possibilities as to how I would specifically work an order. The prints, the offering, the bid, the rest of the market, all come into play. What doesn't is, "what's the cheapest way to execute this trade?" Act is a system whereby if I do a trade with a firm on the phone, I can then, after the fact, acknowledge, lock it in, electronically. Imagine I call GLCO and buy 10000 dell or even 1000 dell at 74. Lets go back 10 years. Lets say we don't ahve electornic locking systems. Now my clerk walks over to GLCO and wants delivery in exchange for the 10000 shares. The stock is now 6 points higher. They say, "we don't know that trade:' you're screwed. Act created a system where I can immediately put up onto an electronic bulletin board by buy of 10000. They immeidately accept it and boom, its locked in. The shares then transfer electronically. Beautiful stuff. If they deny the trade, I will see it in minutes because I will know that my order was not accepted by them. We can then dispute it, argue it within minutes of the trade, the current pricing, rather than days later. Regards Steve@yamner.com