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Gold/Mining/Energy : Yogen Fruz IT'S ALIVE, IT'S ALIVE -- Ignore unavailable to you. Want to Upgrade?

To: swot who wrote (977)	1/13/1999 1:49:00 PM
From: Stocker	Respond to of 2453

Re <<< I have to admit, I still don't understand why a broker buys from themselve - especially in such large quantities. Is it for tax purposes?>>>> Brokers will often cross large blocks of shares, acting as both the buyer and the seller on the same transaction. As an example, lets say a that large pension, mutual fund, etc. is looking to sell a big chunk of shares. They have two options - selling them bit by bit into the market over a period of what could take weeks, or try to find a buyer that will take all the shares at once. Choosing the first option, they could substantially move the share price lower as they sell stock piece meal. Choosing the last option, they would call up Gordon's equity desk and ask Gordon to "shop" 1.3mm of YF. The seller might also call a few other brokers too. Gordon would then call their large clients that they think might be interested in buying the stock. If they find a buyer and the two agree on a price, then the cross gets done. For Gordon it's really just a transfer of shares from one of their client's accounts to another, plus a whole lot of commission. If Gordon can't find a buyer internally, they'll call a few other brokerage firms to see if they have any large buyer interest. That's how it works. Reverse is true if you want to buy a lot of shares at once. Hope this helps.