Quote from sjfan:
Of course you are right on two levels:
-- You won't generate that kind of spread on a $5MM AUM
-- You'll see a 10bp spread on liquid products.
Pertaining to the second point, on one end you obviously have stuff like on the run treasury notes with bid/offer at 1/8th of 1/32; On the other end, you have 50Y Cancelable Swaps or odd lot non-agency MBS with the spread measured in points (although these are pretty much one sided markets). I've seen (although this was in the slightly abnormal 2008/2009 period) a $10MM trade in CMO being flipped for around 200k for the dealer.
In any case, my point was that $200k/yr is not considered significant amt of commission for OTC dealers.
