5 ms·
I witnessed exchange of $300MM of stock for cash in late 90s at my job. You are correct that noone sels $1B of stock and doesn't make dent in trading value. So
by joering2 9y ago
I witnessed exchange of $300MM of stock for cash in late 90s at my job. You are correct that noone sels $1B of stock and doesn't make dent in trading value.
So to do that right, you get on the phone with broker who agrees to buy such quantity. You put order SELL at $5 and 1,000,000 shares ONLY, which means noone can buy just 10 shares: you take 1MM or none. Once your call reach the market, within seconds the other party puts a BUY call at 1,000,000 shares. 10 seconds later the whole transaction is done. It doesn't affect market at all, because the price fluctuates based on supply and demand. In our scenario X of supply met X of demand immediately, so the market didn't tick. Of course such large volume might be some sort of a signal (buy or sell, depends on party that looks at it), but will not trigger serious movement of stock, immediately.
- jpatokal 9y agoThat may have been the case in the 1990s, but isn't 10 seconds an eternity in today's HFT world? You'd need to arrange the sale off the exchange.
- joering2 9y agoNo you wouldn't. Its not like hundreds of big fish is waiting at their keyboard trying to push "BUY 10MM stock" at the right spot, because it might show up at the stock exchange. These "deals" are secret as of when they take place. As I said, you get on the phone, 3 seconds one party post "BUY 10MM", second party post "SELL 10MM". Done and done.