Picking Up the Pieces
Traders Magazine, April, 2008 by James Ramage
The scenario sounds simple. You're an institutional buyside trader who just got an order to sell 100,000 shares of an illiquid name at a specific price as soon as possible. Where do you begin?
Maybe 10 years ago you'd have shipped it to the New York Stock Exchange floor, where for decades 80 percent of all of its shares traded. But because the market's now far more fragmented, just under 40 percent of listed stocks trade there. So, do you execute it yourself or call a broker? If you handle it yourself, as more of the buyside is, you're faced with a plethora of choices. You could look in the giant buyside-only dark pool, Liquidnet, and try to find a counterparty there. You could cut the order into pieces and use algorithms, smart order-routing and direct-market-access tools...
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