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Hi Patrick,
You wrote:
> Don's "questionable" (whether it was or not I do not know) trade was on BA, I believe. BA is not NASDAQ, Schwab cannot get any better a fill than you or I.
>
I believe that there is a general misunderstanding concerning how some
of these trades work, both on NASDAQ and NYSE stocks. In my firm, we
have a Instinet, Selectnet, SuperDOT, SOES, Island, and Bloomberg amoung
other methods to place trades. If a brokerage house trading room can
get a better price fill on a third market (ie, Boston, Philly, Pacific,
Chicago, NASDAQ, etc.), then they will pick off that order, fill it, and
give a "price" improvement to the customer if it is in the best iterest
of the trading firm. Charles Schwab is one of the largest independent
market making and 3rd market brokers in the country. If the firm can
buy BA at 60 via their internal traders, sell it to Don Green at 60 1/8,
and that price is better than the best offer at the time of 60 1/4, so
be it.
Likewise, with internal order flow that Schwab has, they may have had a
large order to sell "at the market" from an institution, but to "lay
off" the stock and not drive down the price, they sold it piece meal out
to incoming orders. Again, it looks like a "price improvement" to the
customer, but if a 100,000 share order hit the NYSE, BA might drop a
full point before the trade was accomplished. Without being able to
inspect the full time and sales, best bid and best ask, and time of day
to within one minute, it is difficult to judge how the trade went off.
Likewise, the time reported by Schwab to the customer may not be the
time that the trade actually took place, but the SEC permits trades to
be "slipped" in time up to 3 minutes. I know, because I have used
another major firm and they sometimes pick off parts of my trades, give
apparent "price improvement", but as I watch time and sales the NYSE
trade really takes place in Chicago or Boston depending upon the stock.
If I can save a 1/8 of a point going in and coming out, and they make
money, so be it.
Good luck and make a million
R Tareilo
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