Placing market orders with brokers
Discussion
What is generally expected from retail brokers when wanting to place and execute orders in a market - particularly so in a wide bid/offer spread?
HL said they wouldn't place an order in the market, but only execute trades at the bid or offer prices, which for this particular product was a 4% spread.
Now... I have no issues with paying them commission to place an order (best bid, best offer), and work for me, but it seems wrong to pay commission to buy at the offer price, and then let them unwind their position at some point in future; its not only giving them a trading opportunity and flow to the desk, but paying for the privilege as well!
Am I expecting too much? When talking to a broker it is generally them working for me, not them dictating what I can and cannot do in the market, and if they are going dictate and give themselves opportunities to generate margin, why am I then expected to pay a £12 trading commission as well?
HL said they wouldn't place an order in the market, but only execute trades at the bid or offer prices, which for this particular product was a 4% spread.
Now... I have no issues with paying them commission to place an order (best bid, best offer), and work for me, but it seems wrong to pay commission to buy at the offer price, and then let them unwind their position at some point in future; its not only giving them a trading opportunity and flow to the desk, but paying for the privilege as well!
Am I expecting too much? When talking to a broker it is generally them working for me, not them dictating what I can and cannot do in the market, and if they are going dictate and give themselves opportunities to generate margin, why am I then expected to pay a £12 trading commission as well?
Edited by Condi on Friday 13th September 23:32
There is so little money in broking that given that their model is not high flow nor time sensitive they have probably structured their desk to just process order flow and to not offer the facility to work an order which costs more in terms of labour. Most houses that do do it will do so by giving the client access electronically and thus shifting that labour element onto the client but then you need the massive flow to justify the higher exchange fee and tech costs of delivering order book facilities to customers.
Condi said:
Is there any platform or broker which allows direct market access?
At wider spreads then working the market is exactly what a broker should be doing to earn their money!
They aren’t brokers though. They are order processors. At wider spreads then working the market is exactly what a broker should be doing to earn their money!
Even IG have just tinned the last of their actual brokers. Why pay £100k+ for a broker when 99.9% of the job can be done by a £30k clerk?
Your easiest solution is to look for an online broker who offers level 2 access for free on physical. But what you are likely to find is that there will be minimum activity requirements to avoid having to pay the access fees.
Because the industry has raced to the bottom on commissions, long ago we reached the point that physical, ex only business wasn’t profitable and most firms only offering as a lost leader to acquire clients to which they will sell other products to.
Is it worth checking if iii still have a dealing desk that offers broking? I’m sure someone will but they are all dying out.
Condi said:
What is generally expected from retail brokers when wanting to place and execute orders in a market - particularly so in a wide bid/offer spread?
HL said they wouldn't place an order in the market, but only execute trades at the bid or offer prices, which for this particular product was a 4% spread.
Now... I have no issues with paying them commission to place an order (best bid, best offer), and work for me, but it seems wrong to pay commission to buy at the offer price, and then let them unwind their position at some point in future; its not only giving them a trading opportunity and flow to the desk, but paying for the privilege as well!
Am I expecting too much? When talking to a broker it is generally them working for me, not them dictating what I can and cannot do in the market, and if they are going dictate and give themselves opportunities to generate margin, why am I then expected to pay a £12 trading commission as well?
So......they no longer take MIT's or GTC's? Given all markets are screen based, Im surprised they won't take the order and load it up. HL said they wouldn't place an order in the market, but only execute trades at the bid or offer prices, which for this particular product was a 4% spread.
Now... I have no issues with paying them commission to place an order (best bid, best offer), and work for me, but it seems wrong to pay commission to buy at the offer price, and then let them unwind their position at some point in future; its not only giving them a trading opportunity and flow to the desk, but paying for the privilege as well!
Am I expecting too much? When talking to a broker it is generally them working for me, not them dictating what I can and cannot do in the market, and if they are going dictate and give themselves opportunities to generate margin, why am I then expected to pay a £12 trading commission as well?
Edited by Condi on Friday 13th September 23:32
kurt535 said:
So......they no longer take MIT's or GTC's? Given all markets are screen based, Im surprised they won't take the order and load it up.
HL allow you to place submit an order which will be executed if the other side is at a level to allow it to executed. EG you can submit a buy order at X price, but that won't be shown to the market, and will only go through when the on screen offer gets to X. What I was wanting to do was tighten up the bid/offer spread, because there was a seller hitting best bids without necessarily putting an offer up. In which case a MIT price is not very helpful. And given the 4% spread, it is much more advantageous to be best bid and let the seller come to you, than reach for the offer.
But as DA says, they are evidently simple order processors, and not proper brokers.
Condi said:
it seems wrong to pay commission to buy at the offer price, and then let them unwind their position at some point in future; its not only giving them a trading opportunity and flow to the desk, but paying for the privilege as well!
Stock Exchange has some useful info on Direct Market Access,WHAT IS DMA?
Traditionally a broker has sent an investor's order to a specialist market maker known as Retail Service Provider (RSP), however DMA now provides you with a choice. DMA allows you to take greater control of your trades by using a broker to place your orders directly on the central market along with all the other market participants. A relatively new service for investors in the U.K. but a benefit which has been enjoyed by investors for sometime in other major markets around the world.
The key benefits of DMA include:
* Equal playing field: Every order is of equal status on the order book, prioritised only in terms of price and time.
* Visibility: Orders are visible to the entire market allowing all market participants full contribution to central market liquidity.
* Depth of order book: The order book shows the number of buyers versus the number of sellers and at what price they are willing to trade.
* Set your own price: Limit orders can be entered at whatever price you choose and will be available to the entire market.
* Tighter spreads: As limit orders are displayed publicly rather than held privately, market spreads become tighter, benefiting the order placer, who has a higher chance of getting executed at the price and the market as a whole which has a tighter public reference price to work from.
* Auction participation: You can participate in the pre-market and post-market auctions where the highest or lowest price often occurs.
* Peace of mind: Regulation and market supervision by the Exchange.
* Certainty: The order book is always available during trading hours.
DMA PROVIDERS
To start trading via DMA you will need to set up an account with one of the available DMA provider.
Click here to access the list of DMA providers..... (you'll need to find the clicky in the link below)
https://www.londonstockexchange.com/prices-and-mar...
DonkeyApple said:
That’s sounds like they are selling flow to someone like Chi-X as opposed to placing on the LSE?
Slight topic high-jack. Do you know a route to being authorised to run a PAMM? Or someone who I could take advice from?
I've done the social trading thing for a bit but the copiers are morons and you spend more time addressing their questions than focusing on the task at hand.
La Liga said:
light topic high-jack.
Do you know a route to being authorised to run a PAMM? Or someone who I could take advice from?
I've done the social trading thing for a bit but the copiers are morons and you spend more time addressing their questions than focusing on the task at hand.
Haha. Indeed. I’m actually in the process of pulling out of offering copy trading because it is just far too labour intensive trying to get people to use it appropriately on either side. Do you know a route to being authorised to run a PAMM? Or someone who I could take advice from?
I've done the social trading thing for a bit but the copiers are morons and you spend more time addressing their questions than focusing on the task at hand.
The PAMM side is absolutely riddled with time wasters as you can imagine but this is the side of the industry I’m mostly focussed on.
I’d be very happy to chat by phone to give some pointers and ideas as that’s probably the easiest way. Just PM me if you’d like to chat on Monday or whenever.
DonkeyApple said:
La Liga said:
light topic high-jack.
Do you know a route to being authorised to run a PAMM? Or someone who I could take advice from?
I've done the social trading thing for a bit but the copiers are morons and you spend more time addressing their questions than focusing on the task at hand.
Haha. Indeed. I’m actually in the process of pulling out of offering copy trading because it is just far too labour intensive trying to get people to use it appropriately on either side. Do you know a route to being authorised to run a PAMM? Or someone who I could take advice from?
I've done the social trading thing for a bit but the copiers are morons and you spend more time addressing their questions than focusing on the task at hand.
The PAMM side is absolutely riddled with time wasters as you can imagine but this is the side of the industry I’m mostly focussed on.
I’d be very happy to chat by phone to give some pointers and ideas as that’s probably the easiest way. Just PM me if you’d like to chat on Monday or whenever.
Condi said:
What is generally expected from retail brokers when wanting to place and execute orders in a market - particularly so in a wide bid/offer spread?
HL said they wouldn't place an order in the market, but only execute trades at the bid or offer prices, which for this particular product was a 4% spread.
Now... I have no issues with paying them commission to place an order (best bid, best offer), and work for me, but it seems wrong to pay commission to buy at the offer price, and then let them unwind their position at some point in future; its not only giving them a trading opportunity and flow to the desk, but paying for the privilege as well!
Am I expecting too much? When talking to a broker it is generally them working for me, not them dictating what I can and cannot do in the market, and if they are going dictate and give themselves opportunities to generate margin, why am I then expected to pay a £12 trading commission as well?
It depends what you’re trading, but the broker is unlikely to have or take any position based on your trade.HL said they wouldn't place an order in the market, but only execute trades at the bid or offer prices, which for this particular product was a 4% spread.
Now... I have no issues with paying them commission to place an order (best bid, best offer), and work for me, but it seems wrong to pay commission to buy at the offer price, and then let them unwind their position at some point in future; its not only giving them a trading opportunity and flow to the desk, but paying for the privilege as well!
Am I expecting too much? When talking to a broker it is generally them working for me, not them dictating what I can and cannot do in the market, and if they are going dictate and give themselves opportunities to generate margin, why am I then expected to pay a £12 trading commission as well?
Edited by Condi on Friday 13th September 23:32
They give you the bid/offer your give your instruction, they execute and earn the commission and process the admin.
Even in the old days a brokers dealer would rarely do anything else for small trades, you (a dealer) used your favours for the big/tricky stuff.
A blue button would often be toyed with by being sent into the market for a simple trade below offer/above bid on a quiet day just to keep everyone amused was just annoying.
These days, I guess it’s a punch the trade in and move on, who much effort would anyone in any field go to for £12, what’s minimum wage these days and how long will it take just to tie up the admin behind the trade?
Marcellus said:
It depends what you’re trading, but the broker is unlikely to have or take any position based on your trade.
They give you the bid/offer your give your instruction, they execute and earn the commission and process the admin.
Even in the old days a brokers dealer would rarely do anything else for small trades, you (a dealer) used your favours for the big/tricky stuff.
A blue button would often be toyed with by being sent into the market for a simple trade below offer/above bid on a quiet day just to keep everyone amused was just annoying.
These days, I guess it’s a punch the trade in and move on, who much effort would anyone in any field go to for £12, what’s minimum wage these days and how long will it take just to tie up the admin behind the trade?
I'm very obviously flogging a dead horse here, but at work we have brokers and direct market access, depending on what market I'm trading, and the brokers work for me. If they turned round and said all they were going to do was facilitate trades at whatever was showing on screen the accounts would be wound up pretty quickly! With technology allowing all the admin etc to be done automatically I don't understand what is so complicated? They don't even have to send a confirmation in the post, an email will suffice. They give you the bid/offer your give your instruction, they execute and earn the commission and process the admin.
Even in the old days a brokers dealer would rarely do anything else for small trades, you (a dealer) used your favours for the big/tricky stuff.
A blue button would often be toyed with by being sent into the market for a simple trade below offer/above bid on a quiet day just to keep everyone amused was just annoying.
These days, I guess it’s a punch the trade in and move on, who much effort would anyone in any field go to for £12, what’s minimum wage these days and how long will it take just to tie up the admin behind the trade?
Condi said:
I'm very obviously flogging a dead horse here, but at work we have brokers and direct market access, depending on what market I'm trading, and the brokers work for me. If they turned round and said all they were going to do was facilitate trades at whatever was showing on screen the accounts would be wound up pretty quickly! With technology allowing all the admin etc to be done automatically I don't understand what is so complicated? They don't even have to send a confirmation in the post, an email will suffice.
I do suspect that it is a simple case of your company employing brokers because your general business requires broking, or enough broking to warrant the cost of brokers, whereas, HL’s business doesn’t warrant brokers so they employ order processing clerks who have the title ‘broker’. I don’t really imagine that a firm that focuses on discount fund buying has many clients sensitive to the same needs or more accurately, expectations as you.
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