Wholesale Order Flow Is Up( Brokers Transacting With Brokers)

Category: Finance.

In this article, we ll highlight a recent market structure matter observed in at least three separate cases: changes in sellside desk order flow in and around upgrades and downgrades. Ve said before that sellside firms, particularly the big Prime brokers, have evolved into purveyors of services rather than providers of information to buyside clients.

We& #146. Order flow indicated that Primes went the extra mile, putting capital at risk in order to help important institutional clients manage risk in the present uncertain equity- markets environment. Wholesale order flow is up( brokers transacting with brokers) . Short interest, a function of risk management more than specific shorting, increased. Electronic volume is down( the buyside is asking the sellside for its commitment and assistance) . And we also saw some evidence of substantial activity ahead of upgrades.

And back to the central point, we saw anecdotal evidence that a number of downgrades( for specific firms and for industries) might well have been reactions to selling already originating on the buyside. Please note: we are NOT suggesting impropriety. This data exists at both Nasdaq Online and NYSENet to help investor relations professionals examine your own order flow. But we ARE suggesting that some sellside actions may result from what the buyside says rather than what equity research folks think. Look at activity for a given firm on the day of an upgrade or downgrade, and also volume on either side versus trailing averages. Ll have to back into the data( drop me a note and I& #146. Nasdaq firms, you& #146.

Ll explain) ; I know because I did it as a Nasdaq IRO. Well, for all kinds of reasons, not the least of which is understanding who actually influences your price, and who is merely capitalizing for economic gain on transactional opportunities. Why does it matter to your investor relations program? These details can only be seen in executed order flow.

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