Forum Archive Index - August 2000

[James Lee <James.Lee@directbroking.co.nz>]

Brian,

 

The matching process only occurs when the bid exceeds the offer, this will occur when investor battle it out to pick up stock on the open.

As to the other query, there is no match at limit prices as you point out.

I will use Jeremys' data to explain.

 

BIDS                                 OFFERS

# Volume Price                 Price Volume #

1 6 57,300 382                     383 10,158 2 1

At this stage there is no trading, if a client advises their broker they wish to buy 5T at Market the purchase will occur at 3.83 if they wish to sell then it occurs at 3.82, so in a typical situation there will be no interaction between the brokers, if there is an unusually large order they may ring the other broker.

Typically the broker will prefer for the client to place a limit order, or speak to them before placing a market order, as market is such a vague idea that invariably situations will arise when the client is unhappy. 

What I assume you are getting at is what happens when both brokers have a market order, well to be honest sometimes it is just who hits the keys the slowest. 

I hope this helps.

 

-----Original Message-----
From: Brian Gale [mailto:brigale@i4free.co.nz]
Sent: Thursday, August 10, 2000 4:51 PM
To: sharechat@sharechat.co.nz
Subject: RE: [sharechat] Market Depth Interpretation ?

Following on with this topic which perhaps you or Sarah could answer.

At 12:51 10-08-00 +1200, you wrote:

So in this case the top bid would take the top offer and continue down until
trading stops, when trading stops whatever the price is at that point it
will charge all the orders at that final price called the opening match
price.

How is the match actually achieved ?  Take a case where the bid is 20c and the offer 21c. One or other of the parties has to change to achieve a sale.  If both parties are on reserve prices there can't be a match.
I think it is true to say the most brokers prefer clients to be ' At Market' which obviously then gives the broker the final say and of course the ability to effect the sale. But one or other of the parties lose out, albeit by 1cent in this example. Is this a question of give and take between brokers ?

BG