Usage of Post-trade allocation for Single orders

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Imported from previous forum

2

Hello,
Is the usage of Post-trade allocation for single orders (non block orders) a common market practice?
Is there any advantage/legal requirement in certain cases or markets not to disclose the account for which the order is sent right away for single orders, but to indicate it only post-trade?
Is the Tag1 account used for group(bulk) orders? in which situation.

Thanks in advance for your insight,

Elias Nechachby.

3

[ original email was from Jim Kaye - jim.kaye@gs.com ]
Hi,

a) Usage of post trade allocs is extremely common (if you include non-FIX communications). Usage in FIX is becoming common with an increasing number of buy side firms and their vendors being able to support this.

b) I am not aware of any restrictions to hide the account details prior to execution, though unless the order is to be allocated to a single account or you can be guaranteed of a full fill (e.g. in the case of certain principal trades), pre-trade allocation carries the risk of having to re-allocate (or at least agree some rebalancing mechanism) in the event of a partial fill.

c) Tag 1 is used for pre-trade allocation. If by ‘group’ orders you are referring to program trades, then the answer is still yes, though it should only ever be used for a single account.

Pre-trade allocation to multiple accounts is not uncommon in program trading.

Best regards,

Jim.

> Hello,
> Is the usage of Post-trade allocation for single orders (non block orders) a common market practice?
> Is there any advantage/legal requirement in certain cases or markets not to disclose the account for which the order is sent right away for single orders, but to indicate it only post-trade?
> Is the Tag1 account used for group(bulk) orders? in which situation.
>
> Thanks in advance for your insight,
>
> Elias Nechachby.
>

4

Thanks for you insight.
My question was exactly that, i.e. is it common to use post trade allocation when there is with certainty one unique account at stake (single order)? Does this make any sense?
My second question was is it possible for a buy side firm sending a bulk order, i.e. one unique share bought for several account (not a program trade, i.e. several securities bought for one or many accounts), to have however to use the tag1 Account in order to specify the global acccount on which the order has to be allocated before the post allocation takes place? For example to make a difference pre-trade between different activities of the buy side firm (institutional, mutual funds, retail) or for any other usage?

Regards,
Elias Nechachby.
> Hi,
>
> a) Usage of post trade allocs is extremely common (if you include non-FIX communications). Usage in FIX is becoming common with an increasing number of buy side firms and their vendors being able to support this.
>
> b) I am not aware of any restrictions to hide the account details prior to execution, though unless the order is to be allocated to a single account or you can be guaranteed of a full fill (e.g. in the case of certain principal trades), pre-trade allocation carries the risk of having to re-allocate (or at least agree some rebalancing mechanism) in the event of a partial fill.
>
> c) Tag 1 is used for pre-trade allocation. If by ‘group’ orders you are referring to program trades, then the answer is still yes, though it should only ever be used for a single account.
>
> Pre-trade allocation to multiple accounts is not uncommon in program trading.
>
> Best regards,
>
> Jim.
>
>
> > Hello,
> > Is the usage of Post-trade allocation for single orders (non block orders) a common market practice?
> > Is there any advantage/legal requirement in certain cases or markets not to disclose the account for which the order is sent right away for single orders, but to indicate it only post-trade?
> > Is the Tag1 account used for group(bulk) orders? in which situation.
> >
> > Thanks in advance for your insight,
> >
> > Elias Nechachby.
> >
>

5

Hi,
The answer to you first question is that it depends on the markets:
In the US:
People tends to use systematically post trade allocation whether for single account order or bulk orders (they do not send the account at the order level even for single account orders)
In Europe:
People tends to use post trade allocation for mutli-account order. For single account order the account is specified at the order level
In Asia:
People use most of the time pre-trade allocation as it is a legal requirment.
Regarding your second question:
It would be very interesting for the brokers to require a specified or defaulted global account for non pre-allocated order. This will enable them to get rid of the risk of having to allocate on their own account an order for which they have not received the proper allocation during the day.
Hoiwever I do not know whether this process is implemented anywhere.

> Thanks for you insight.
> My question was exactly that, i.e. is it common to use post trade allocation when there is with certainty one unique account at stake (single order)? Does this make any sense?
> My second question was is it possible for a buy side firm sending a bulk order, i.e. one unique share bought for several account (not a program trade, i.e. several securities bought for one or many accounts), to have however to use the tag1 Account in order to specify the global acccount on which the order has to be allocated before the post allocation takes place? For example to make a difference pre-trade between different activities of the buy side firm (institutional, mutual funds, retail) or for any other usage?
>
> Regards,
> Elias Nechachby.
> > Hi,
> >
> > a) Usage of post trade allocs is extremely common (if you include non-FIX communications). Usage in FIX is becoming common with an increasing number of buy side firms and their vendors being able to support this.
> >
> > b) I am not aware of any restrictions to hide the account details prior to execution, though unless the order is to be allocated to a single account or you can be guaranteed of a full fill (e.g. in the case of certain principal trades), pre-trade allocation carries the risk of having to re-allocate (or at least agree some rebalancing mechanism) in the event of a partial fill.
> >
> > c) Tag 1 is used for pre-trade allocation. If by ‘group’ orders you are referring to program trades, then the answer is still yes, though it should only ever be used for a single account.
> >
> > Pre-trade allocation to multiple accounts is not uncommon in program trading.
> >
> > Best regards,
> >
> > Jim.
> >
> >
> > > Hello,
> > > Is the usage of Post-trade allocation for single orders (non block orders) a common market practice?
> > > Is there any advantage/legal requirement in certain cases or markets not to disclose the account for which the order is sent right away for single orders, but to indicate it only post-trade?
> > > Is the Tag1 account used for group(bulk) orders? in which situation.
> > >
> > > Thanks in advance for your insight,
> > >
> > > Elias Nechachby.
> > >
> >
>