Forum Archive Index - December 2001

["Ben Dutton" <bendutton@sharechat.co.nz>]

John,

As far as I know (and stand to be corrected) only three online broking firms
are offering depth for their clients at the moment - they are

Access Brokerage
ASB Securities
Direct Broking

I can say with certainty that the service will not be provided to investors
for free from non-broker websites - why?  It just costs too much.  It just
doesn't make fiscal sense to provide it (any company that did would
certainly be losing money).

Stocknessmonster.com will be looking at supplying depth through a paid
subscription model in the future but there are no immediate plans on
supplying the service at the moment.

This isn't the fault of the service providers, this is the fault of the
NZSE - they have made the cost of depth too prohibitive for investors to
freely use.

But then again, maybe investors also have to realise that the days of *all*
information being available for free on the Internet are numbered.
Companies can't and won't keep on losing money forever.

Best Regards

Ben Dutton


----- Original Message -----
From: "Wedde, John" <John.Wedde@weltec.ac.nz>
To: <sharechat@sharechat.co.nz>
Sent: Tuesday, December 04, 2001 12:09 PM
Subject: RE: [sharechat] what does it all mean??


> Hi Ben,
> So, Depth, finally, is here.
> Where can I get it? Are there any charges or strings attached to its
> provision?
> My "old fashioned" method of acquiring Depth was simply to phone my
broker,
> but not to do this too often.
>
> Not only do the brokers have Depth but they can also see which broker is
> offering to buy and sell at each price.
> On making a Depth enquiry this morning about Spectrum my broker told me
that
> ALL OF THE BIDS AND OFFERS were from one broker! I won't mention which
> broker that was but it certainly, rightly or wrongly, made me wary of the
> authenticity of this particular Depth information!
> Nevertheless I would still be very keen to get Depth for NZSE stocks and
> await keenly any advice from anybody about where I might get this on the
> Net, free and without any strings attached. If it's not available on this
> basis then the NZSE has, I'm afraid once more, failed to deliver to the
> small retail NZ investor.
> Cheers,
> John Wedde
>
> -----Original Message-----
> From: Ben Dutton [mailto:bendutton@sharechat.co.nz]
> Sent: Monday, 3 December 2001 19:20
> To: sharechat@sharechat.co.nz
> Subject: Re: [sharechat] what does it all mean??
>
>
> John,
>
> Viewing depth can be pretty subjective, and sometimes just darn
misleading.
> I'll have a stab at helping you out though.
>
> Lets take the Telecom depth snapshot that you provided:
>
>
>
>   BIDS   OFFERS
>   # Volume   Price   Price   Volume #
>
>   <http://www.access-brokerage.co.nz/images/null.gif>
> 1 2 83,881   501
> <http://www.access-brokerage.co.nz/images/null.gif> 502
> 111,462 2 1
>   <http://www.access-brokerage.co.nz/images/null.gif>
> 2 5 55,857   500
> <http://www.access-brokerage.co.nz/images/null.gif> 503
> 10,000 1 2
>   <http://www.access-brokerage.co.nz/images/null.gif>
> 3 1 20,000   499
> <http://www.access-brokerage.co.nz/images/null.gif> 504
> 10,235 2 3
>   <http://www.access-brokerage.co.nz/images/null.gif>
> 4 2 56,800   498
> <http://www.access-brokerage.co.nz/images/null.gif> 505
> 21,000 3 4
>   <http://www.access-brokerage.co.nz/images/null.gif>
> 5 1 850   495
> <http://www.access-brokerage.co.nz/images/null.gif> 509
> 6,000 1 5
>
> When you took this snapshot the "Buy" and "Sell" quotes would have been
> $5.01 and $5.02, respectively.
>
> There were two orders wanting to buy a total of 83,881 shares at $5.01 and
> there were two orders wanting to sell a total of 111,462 shares at $5.02.
>
> Thus, lets say that you wanted to buy a total of 150,000 shares at $5.02
> (I'm assuming you're a high roller here ;).  You would put in a limit
order
> but only 111,462 shares would be filled.  The buy and sell quotes would
then
> change to 38,538 bid at $5.02 and 10,000 on offer at $5.03 - the 38,538
> would be your shares, waiting to be filled.
>
> Traders like to see market depth because it gives an indication of a level
> of interest in the stock.  For example, lets say you wanted to buy a large
> number of shares of an illiquid stock like ITC or SPE.  You'd look at the
> depth beforehand to see how many sellers there were in the market, and how
> many shares you could get hold of without moving the market up (or down,
if
> you are selling shares).
>
> However, depth has its pitfalls - traders and brokers will put in "fake"
> orders to give a sense that the stock has many buyers or sellers.  For
> example, in that Telecom example I might put buy orders of 500,000 at
$4.99
> to give an illusion that the stock is heavily supported by buyers waiting
in
> the wings.  But, if the stock started moving down, I'd pull the order
before
> it was filled.
>
> Hopefully this makes sense to you John, perhaps others would like to help
> explain the pitfalls of viewing market depth as well.
>
> Best Regards
>
> Ben Dutton
>
>
>
>
>
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