Imported from previous forum
[ original email was from Joe Sommer - jsommer@dlj.com ]
In deliverying IOIs to buyside clients, our traders enter natural indications only.
Recently, we were asked if we distinguish principal from agency business when sending IOIs.
While this is technically feasible, from a business perspective sending only agency indications would limit the amount of merchandise that can be communicated via FIX IOIs.
OTC trades are often completed as principal, which means that our desk has inventory available. Likewise, our Block desk may send an indication to unwind a position that it had previously taken, as principal, to facilitate another client.
What do people think - should natural mean agency only?
Also, I was wondering if it would be useful when sending orders to designate if that order should be allowed to create an IOI, or not.
Should there be a way to inform the broker that an order should be not be represented, in whole or in part, as an IOI?
[ original email was from Mike Cormack - mike_cormack@americancentury.com ]
An agency order is just that, an order a broker dealer is working on behalf
of a customer looking for the natural other side. Any time a broker dealer
takes a position in a stock, whether by choice or in the process of
facilitating an order, the handling of that order and the presentation to
others is as principal.
It is my understanding that the FIX messaging allows for both principal and
agency (or natural) designations when a B-D sends an IOI. If customers
want to see both, the broker dealer community should designate their IOI’s
accordingly and not destroy the integrity of what an agency IOI really is.
AGENCY SHOULD MEAN NATURAL ONLY.
On the second point, customers may request their orders be handled in a
variety of ways, and if there is demand for that type of instruction, the
protocol should allow it.
Mike Cormack
Manager, Equity Trading
American Century Investment Management
mike_cormack@americancentury.com
> In deliverying IOIs to buyside clients, our traders enter natural indications only.
> Recently, we were asked if we distinguish principal from agency business when sending IOIs.
>
> While this is technically feasible, from a business perspective sending only agency indications would limit the amount of merchandise that can be communicated via FIX IOIs.
>
> OTC trades are often completed as principal, which means that our desk has inventory available. Likewise, our Block desk may send an indication to unwind a position that it had previously taken, as principal, to facilitate another client.
>
> What do people think - should natural mean agency only?
>
> Also, I was wondering if it would be useful when sending orders to designate if that order should be allowed to create an IOI, or not.
>
> Should there be a way to inform the broker that an order should be not be represented, in whole or in part, as an IOI?
>
>