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

To: xcr600 who wrote (4027)	12/31/1998 12:30:00 PM
From: Jay Morrison	Read Replies (1) \| Respond to of 4969

<<Woulnd't this be illegal? Especially if in their confirmation statements and quarterly statements would also have to be modified for the extra 1/8>> There is nothing illegal about it. Nothing was modified. It happens all of the time. Your bid was $1 1/8, but you are not going to get filled by a discount broker until the market falls to a point where the stock is $1 bid, $1 1/8 offered. You will only get filled at the offer, so that the discount brokerage firm can make the spread. They sell to you at $1 1/8, then they cover their sale by purchasing from someone at $1. Thus, the discount firm charged you $15 for the trade, but they made their real money by playing the 1/8 spread. If it was 1000 shares, then the discount firm made $125 bucks. I think the original question was, how do trades take place at $1 when someone has an bid in at $1 1/8 without getting filled. The discount broker is not showing the market the $1 1/8 bid until the offer is there. The rest of the market never had the opportunity to sell you stock at $1 1/8. All brokers do this to some extent. Jay