| September and third-quarter trading ended | | | | when program traders adjust models in the new |
| inconclusively last Friday. In the sample group, we | | | | month and quarter. The how is wordier, but drop me |
| saw slight increases in structured products (sellside | | | | a note and I'd be happy to explain. |
| solutions designed to manage risk and achieve mostly | | | | 2. Investors have not committed with enthusiasm to |
| short-term returns for buyside clients), prime | | | | equities, despite the Fed's intervention and recent |
| brokerage order flow indicating modest hedge-fund | | | | Dow strength. Why do we say that? Because order |
| month-end shuffling and a tight balance between | | | | flow reflects unprecedented risk-management |
| what we call Prime and Electronic order flow - to us | | | | efforts. If you're planning aggressive October |
| more proof that the buyside is cost-focused and | | | | outreach, plan it carefully or expect few results. And |
| using direct-market-access trading whenever possible. | | | | if you know that your financial results will significantly |
| What's this mean to you, IROs? Three major | | | | depart from expectations, the degree of response in |
| takeaways: | | | | your equity will turn on this fact (unenthusiastic |
| 1. Learn the kinds of trading desks driving your order | | | | response to strong performance) and on point #1 |
| flow at month-end and quarter-end. Why? Because | | | | above (sharp downticks on poor performance as |
| it's the smoke over the fire under your boiling liquidity. | | | | quant models sell into anemic value buying). |
| Okay, skipping metaphor overkill, the point: this | | | | 3. Be picky about your sellside relationships and spend |
| information tells you who's got the bulk of your | | | | more time going direct to the buyside, because the |
| free-floating liquidity (13F's are way too late to offer | | | | buyside is spending more time going direct to the |
| accurate answers, and indicated positions have little | | | | market. Explanation is likely to be redundant, but we'll |
| bearing on current market structure anyway), be | | | | simply say that single-issue long investment is harder |
| they short-term trading vehicles, hedge funds, | | | | and narrower now, and knowing your market |
| programs, and so on. They may also pinpoint possible | | | | structure is key to spending time wisely. |
| hidden liquidity overhangs, and reveal what to expect | | | | |