Robert Morse
Sponsor
Are you asking if Steve Cohen and guys like him get shows from trading desks and the floor about LARGE blocks of stock, then front run the orders?
How, literally, do the non-retail entities trade?
- Thread starter CyJackX
- Start date
Are you asking if Steve Cohen and guys like him get shows from trading desks and the floor about LARGE blocks of stock, then front run the orders?
I always wondered about this . Is this possible ?
Some entity calls or messages a guy or gal on the floor and they say hey I want this and this at this ... do you accept it or not at xyz range . The guy or gal says yeah , he either works it in during the day moving the market all of a sudden and real quick or shows it in tape right at the close not effecting the market at all . Both maybe. Now we have the guy or gal on the floor front running the big order . Seems like its the way it was setup . They both make money and we need to watch out for it
Yes up until the front running part. That guy or gal will go to jail and never work on Wall Street again
Robert Morse
Sponsor
Steve Cohen, in the past, was one of the largest block traders on the street. He would take down big size and trade out of it. If the broker that shopped the order ever thought that any block trader was front running these orders, they would never get a call again.
The same goes for Option blocks. Large option orders are shown over IMs all day long. If they see order flow come in to hedge a pending trade, the broker will try like hell to find out who did that, and cut them off.
The same goes for Option blocks. Large option orders are shown over IMs all day long. If they see order flow come in to hedge a pending trade, the broker will try like hell to find out who did that, and cut them off.
Maybe its my poor definition of front running . the buyer says give me this at this the mm says ok . he agrees and does what he or she does... they buyer says i dont give sht he agreed i got the shares at my price. what he does after that is his own bizness,, how he or she works that in is of no regard i got my sht right?. when he or she shows tht is their own bizness mean while the maker either moves, accumulates or gets or is stuck with his obligation. they make money on volume right ? Were talking about market makers right? and they do just that ? They will move markets for a large order is that not some definition of front running ?
I'm trying to understand their role in the whole scheme of things.
Thx
Robert Morse
Sponsor
Not complicated. If you are aware of a pending stock block from non-public information, you can't use that to trade until after it prints on the "tape" and is public.
I guess you are asking about a DMMs. They are highly regulated and watched very closely.
https://www.nyse.com/publicdocs/nyse/markets/nyse/designated_market_makers.pdf
Indeed thx for your response and link.
No, not front running. The market maker gives an initial quote for a certain size where the opposite party/broker can immediately trade on. Broker usually goes back to the client to give the market prices and size, client then says:
- buy the offer or sell the bid for x size
- this market is shit, get me a better (tighter and/or more size) one
- I need to buy(sell) for bigger size, build the offer(bid) for size
In the last case, which is more common, the broker goes back and forth with several market makers to built the book... and hits it when right.
The market maker might get some more info if the broker is letting him know the size and direction, but that's not always the case...
It takes time to built up a decent size and that can always get away from you. Even if the market maker knows there's a big buyer, and he buys up offers... suddenly the client is a seller and MM is f*^ked. Or the large trade is done lower... there's no front running here at all....
See this is where i think of a conspiracy , I have a feeling they work together like hey bob i got this order i need to work in can you help me tom .Mean while i dont mind I just want to know about it before hand . You know you get that feeling its about to move.
It's more the brokers working the order for the client that have the front running possibility... And the client itself of course...
And yes, MM's work with the broker as well, but only to the extend that they both want to do the trade. And the MM only wants to be the opposite of the trade, if there's any margin for him in the bid/ask spread or if he knows he will sell at X but he can get some risk of the table by buying lower than X. It's not really front running, the MM wouldn't give the offer at X for decent size if he can't buy back some...
The MM provides liquidity, whether inside the bid/ask or outside... he's just doing his job.