The Oceania Times

Top Menu

  • About us
  • Contact Us
  • Cookie Policy
  • Disclaimer
  • Privacy Policy
  • Terms and Conditions

Main Menu

  • Australian Economy
  • Brokers
  • Commodities
  • Currencies
  • Financial Market
  • Gold and Precious Metals
  • Investment
  • Stock Shares
  • About us
  • Contact Us
  • Cookie Policy
  • Disclaimer
  • Privacy Policy
  • Terms and Conditions

logo

The Oceania Times

  • Australian Economy
  • Brokers
  • Commodities
  • Currencies
  • Financial Market
  • Gold and Precious Metals
  • Investment
  • Stock Shares
  • Asian shares fall as investors brace for inflation report

  • A-Mark Precious Metals (NASDAQ:AMRK) vs. Maison Luxe (OTCMKTS:MASN) Head-To-Head Comparison

  • Stock Market LIVE: Indices flat; Nifty below 17,500; IT, Media drag

  • The big change coming to Australian inflation after Reserve Bank governor Philip Lowe laughed at

  • South Korean won, Philippines peso lead losses among subdued Asian currencies

Brokers
Home›Brokers›Broker-fund manager nexus can be broken?

Broker-fund manager nexus can be broken?

By Megan
May 29, 2022
17
0
Share:

Mumbai: The nexus between fund managers and brokers is well known. We often hear that they work hand-in-glove. Today we will take a closer look at how this actually happens.

An order to buy shares or sell shares is decided by a fund manager who then intimates the same to his dealer or chief dealer, who then passes on the order to an empanelled broker to execute the same.

Prior to passing on the order to the broker to execute the same, a position is taken through an accommodative broker in the F&O segment if the share is traded there. Say for example an order is issued to buy a stock which is a part of the large cap stock category. This would trade in the F&O segment. A position to buy futures would be taken. This would help to generate returns as the size of order could be significant and would move the market price of the stock being purchased. Once the ordered quantity is near completion, the futures trade would be reversed and the position taken thus squared off.

The difference between the buy price and the sell price is pocketed without anyone knowing anything. The order in the cash market is completed. Similar would be the case if the order is a sell order. Go short in futures and towards the end of the order square up the short future. This method is fine where the stock is in the futures segment.

Let us now come to a situation where the stock is from the Midcap or Smallcap segments and is not traded in the futures segment. The situation changes. In case of a buy order, a position is taken in the cash markets prior to execution of the order starting. On completion or near completion, it is reversed. In case of a sale order while the reverse does happen, it needs to be borne in mind that irrespective of completion, the short sale has to be squared off before the day ends as all cash sales have to result in deliveries. If the order continues the next day, similar positions are taken on the following day once again.

Let us now take another case where shares are available from a market counterparty. Here the share price at which the deal would be done is finalised. The price starts moving up as the order is executed and the difference between the buying price and the negotiated price is settled.

The key players in this entire operation are the fund manager, dealer or chief dealer and the accommodative broker. In most cases if the scale of operations is large, there would be an understanding between the dealer/chief dealer and the fund manager. The spoils are shared between the broker on one side and the fund manager and dealer on the other side. Percentages would vary on size, number of people involved and so on. Confidentiality being the key, sharing is more or less on equal terms which are pre-decided. Various options are used which include trading in different names and so on.

The key is that all these leave trails and there have been umpteen cases where trades done in the names of family members have been detected subsequently. Hence a proper, non-trail system has to be put in place.

Even TV channel anchors trading in family members’ names have been caught. The solution, which is relatively safer, is that the broker provides an entity in which these trades are done and all profits are settled in cash.

Can this nexus be detected or broken? Yes. There have been various audits which are being done by fund houses, which see the details of the order through trades as it gets filled. Dealing room calls are all on recorded lines which make life more difficult. While there are chances of getting caught in anything illegal being done, no one can save a person who invites attention by driving a car which is an icon by itself.

The Lamborghini car, which is so much in the news, has made the fund manager and chief dealer a person who others have become envious of because of unasked and unwarranted limelight. Should be an easy case for the regulators to crack and plug many loopholes.

Source link

Previous Article

$2 million gold tabernacle stolen from Park ...

Next Article

2 ASX shares experts think have sold ...

0
Shares
  • 0
  • +
  • 0
  • 0
  • 0
  • 0

Megan

Related articles More from author

  • Brokers

    Mutual of America Capital Management LLC Purchases 1,532 Shares of Interactive Brokers Group, Inc. (NASDAQ:IBKR)

    July 25, 2022
    By Megan
  • Brokers

    Brokers Set Expectations for Eisai Co., Ltd.’s FY2027 Earnings (OTCMKTS:ESALY)

    July 29, 2022
    By Megan
  • Brokers

    Richardson Lewis Review 2022 – Is Richardson Lewis Scam or a Good Broker?

    June 23, 2022
    By Megan
  • Brokers

    Marcus & Millichap : Brokers the Sale of Holiday Inn Denver Parker, a 101-Room Hotel in Parker, Colorado

    June 14, 2022
    By Megan
  • Brokers

    FINRA Fines Broker-Dealer $9 Million For Allegedly Attempting To Influence The Market For Offered Securities

    July 6, 2022
    By Megan
  • Brokers

    DA Davidson Brokers Boost Earnings Estimates for Best Buy Co., Inc. (NYSE:BBY)

    May 30, 2022
    By Megan

Leave a reply Cancel reply

You may interested

  • Brokers

    Carreras : CARIBBEAN ASSURANCE BROKERS LIMITED (CAB)- Resignation

  • Investment

    Hartford Investment Management Co. Trims Position in DTE Energy (NYSE:DTE)

  • Investment

    Tips for investing in a bear market

  • LATEST REVIEWS

  • TOP REVIEWS

Timeline

  • August 10, 2022

    Asian shares fall as investors brace for inflation report

  • August 10, 2022

    A-Mark Precious Metals (NASDAQ:AMRK) vs. Maison Luxe (OTCMKTS:MASN) Head-To-Head Comparison

  • August 10, 2022

    Stock Market LIVE: Indices flat; Nifty below 17,500; IT, Media drag

  • August 10, 2022

    The big change coming to Australian inflation after Reserve Bank governor Philip Lowe laughed at

  • August 10, 2022

    South Korean won, Philippines peso lead losses among subdued Asian currencies

Best Reviews

Latest News

Stock Shares

Asian shares fall as investors brace for inflation report

People walk past a screen displaying the Hang Seng stock index outside Hong Kong Exchanges, in Hong Kong, China July 19, 2022. REUTERS/Lam Yik Register now for FREE unlimited access ...
  • A-Mark Precious Metals (NASDAQ:AMRK) vs. Maison Luxe (OTCMKTS:MASN) Head-To-Head Comparison

    By Megan
    August 10, 2022
  • Stock Market LIVE: Indices flat; Nifty below 17,500; IT, Media drag

    By Megan
    August 10, 2022
  • The big change coming to Australian inflation after Reserve Bank governor Philip Lowe laughed at

    By Megan
    August 10, 2022
  • South Korean won, Philippines peso lead losses among subdued Asian currencies

    By Megan
    August 10, 2022
  • Recent

  • Popular

  • Comments

  • Asian shares fall as investors brace for inflation report

    By Megan
    August 10, 2022
  • A-Mark Precious Metals (NASDAQ:AMRK) vs. Maison Luxe (OTCMKTS:MASN) Head-To-Head Comparison

    By Megan
    August 10, 2022
  • Stock Market LIVE: Indices flat; Nifty below 17,500; IT, Media drag

    By Megan
    August 10, 2022
  • The big change coming to Australian inflation after Reserve Bank governor Philip Lowe laughed at

    By Megan
    August 10, 2022
  • Asian shares fall as investors brace for inflation report

    By Megan
    August 10, 2022
  • Australian economy survived Covid better than most but recovery could slow, OECD says | Australian ...

    By Megan
    September 14, 2021
  • The Best Online Brokers, According to 5 Financial Experts

    By Megan
    September 14, 2021
  • Is Disaster Looming for Australia’s Economy?

    By Megan
    September 29, 2021

Trending News

  • Stock Shares

    Asian shares fall as investors brace for inflation report

    People walk past a screen displaying the Hang Seng stock index outside Hong Kong Exchanges, in Hong Kong, China July 19, 2022. REUTERS/Lam Yik Register now for FREE unlimited access ...
  • Gold and Precious Metals

    A-Mark Precious Metals (NASDAQ:AMRK) vs. Maison Luxe (OTCMKTS:MASN) Head-To-Head Comparison

    A-Mark Precious Metals (NASDAQ:AMRK – Get Rating) and Maison Luxe (OTCMKTS:MASN – Get Rating) are both small-cap consumer discretionary companies, but which is the superior business? We will compare the ...
  • Stock Shares

    Stock Market LIVE: Indices flat; Nifty below 17,500; IT, Media drag

    Asian markets started on a negative note following a retreat in Wall Street. This was mostly due to the caution ahead of US inflation data that will shape nvestor expectations ...
  • Australian Economy

    The big change coming to Australian inflation after Reserve Bank governor Philip Lowe laughed at

    How Reserve Bank boss getting LAUGHED at on the world stage will radically change Australia’s economy The Australian Bureau of Statistics is trialing a new monthly inflation data series Reserve ...
  • Currencies

    South Korean won, Philippines peso lead losses among subdued Asian currencies

    BENGALURU (Aug 10): Most Asian currencies were subdued on Wednesday, while most stock markets in the region fell, tracking losses on Wall Street, as investors awaited US inflation data later ...
  • About us
  • Contact Us
  • Cookie Policy
  • Disclaimer
  • Privacy Policy
  • Terms and Conditions
© Copyright The Oceania Times. All rights reserved.

SUBSCRIBE TO OUR NEWSLETTER

Get our latest downloads and information first. Complete the form below to subscribe to our weekly newsletter.