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Dealers
Description
Bachelor's degree Trading and Dealing (Liquidity Suppliers) Mind Map on Dealers, created by Vhia Rose on 14/09/2013.
No tags specified
liquidity suppliers
trading and dealing
trading and dealing
liquidity suppliers
bachelor's degree
Mind Map by
Vhia Rose
, updated more than 1 year ago
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Created by
Vhia Rose
about 11 years ago
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Resource summary
Dealers
Primary Activities
Quotes: Set prices and volumes
Market their services
Manage their inventory
Act as intermediary between investors and exchange
Methods of attracting order flow
Quote aggressive prices and sizes
Reputation for high quality execution
Advertising
Cultivating relationships with customers
Side payment
Functions
Supply liquidity ("make a market")
Trade on their own account
Types of dealers
Scalpers
Day traders
Local traders
Market makers
Registered traders
Specialists
Continuously display bid-ask quotes
Quotes posted in limit order book
Management of book not monopolistic
Competition with intermediaries
Provide financial info on designated stocks
Principal traders
Benefits to exchange
Enhance market quality
Attract and supply liquidity
Increase trader profits from enhanced activity
Increase investor confidence
Generates more fees for exchange
Make or take pricing (rebates for order flow)
Obligations
Affirmative
Narrow bid-ask
Maintain price continuity (less price volatility)
Agent for limit order book
Negative
Public order precedence rule
Must yield to public customers first
Public liquidity preservation principle
Trades must be inside the spread
Necessary, but costly
Minimising dealer's use of limit orders
Trading Styles
Passive (spread trader)
Active (position trader)
Quote setting
Where to place bid and offer prices
The spread between bid and offer
Narrow or tight
Wide
Size of the bid-offer
Two sided vs one sided
Firm vs Soft (indicative)
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