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At 07:55 PM 2/4/98 -0500, Greatelto@xxxxxxx wrote:
>If you give a stop loss order on IOM, let's say at 10 7/8 gtc, the broker
will
>enter the order per your instructions. The broker will give it to the
>specialist who makes a market in IOM who will enter the order on his book.
>That is the only place the order will be. If the stock trades below the stop
>loss price on the PSE (after the NYSE closes), the order will not be executed
>by the specialist. Hell, he is off with his chick-a-dee having cocktails and
>"doing other things." The next trading day say the stock opens at 8 on the
>NYSE. That kicks off the stop loss and it becomes a market order to sell.
>If the order was a stop limit, then the specialist has an open order to sell
>at 10 7/8.
This doesn't often happen now, because leaving stop orders on the book
costs the brokerage firm additional specialist commission and because of
the brokerage firm's obligation to seek best execution on ITS. Your stop
order, unless you specify that your order is "Held", lives only on the
brokerage firm's computer, becoming a market order when the appropriate
price is hit. Your salesman probably does not even know this.
>If you ask your personal broker to hold the order on his desk in Des Moines
>and watch the stock trade in all the different markets and when he sees it
>trade at the stop loss price to enter the order to sell, and he says he will,
>that broker is stupid and most likely headed for a lawsuit. Any broker in
his
>right mind would not accept responsibility for such an order. If he is in
the
>crapper and the stock trades through the stop price, can he be held
>responsible? No way!!
You're right: no broker will hold an order on *his* desk unless the
customer requested it--possibly not even then! The order gets entered
immediately into his/her firm's system, but does not automatically go to
the floor. Unless you specify your order is "Held", it is treated as "Not
Held".
Cheers,
rld
Richard Leighton Dixon
rldixon@xxxxxxxx
Disclaimer: Nobody agrees with me.
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