I have this feeling based on previous mocks that the exam will show a table with urgency, size of trade, spread, avg. Daily volume and spreads
and ask which strategy is most appropriate from the usual suspects, crossing systems, VWAP, I/S brokers etc etc
How can we recall the rules for each one and when they apply? Any neat acronyms or anything as they just wont stick!
Try with this…
https://sites.google.com/site/cfalevel3examprep/portfolio-performance-evaluation/ss16/reading-30/30k
Enjoy…
Thanks Flash thats really helpful.
Gostudy notes say that Brokers and crossing systems should be used with HIGH urgency. The notes above suggest otherwise. hmmmm.
Brokers are expensive. Because they’re not your friends (like dealers are) so they’ll charge a B/A spread in order to move a large block trade.
Cross Systems I think hide price discovery. So they may or may not get filled depending on who else is out there that wants to deal. So I think I need to go back and review whether that is something that would require high urgency. Because you could be selling at a deep discount but if no one wants to buy your shares it doesn’t matter how low it is because it would never get executed. Or at least that’s my logic because some trades could be outstanding for months and never get filled.
You have this backwards: brokers are your friends (they work for you), and dealers are not your friends (they’re the counterparties in transactions). You have to pay brokers, of course, but they have no reason to want you to lose money on a transaction; dealers have every reason to want you to lose money on a transaction.
You can screw the dealer as well if you simulate the false signals. Eg. leave an appearance that you’re not well informed trader in fact you’re.
This site is not working, by any chance you have the content of this site…looks like this was some sort of summary or bullet points?