Don’t understand what is principal trades…?? it is from equity topics… thanks!
And in addition, how could buying and selling contracts on the market index while selling and buying securities for the portfolio at the same time reduce execution cost? this is introduced as one way to reduce execution costs with the future contracts. thank you.
Hey I just read this so I feel like I know it. I guess the easiest way to think of it is you want to buy 100 shares of IMCL so you go to Charles Schwab. Good ole Chuck happens to be holding 100,000 shares of IMCL. So Chuck says he will fill your order, guaranteed at $35. He takes it from his inventory and give it to you. Your second ? is pertaining to selling a large amount of stock at once. Since this is costly and will lower the price if done all at once, you sell a futures contract to offset any lowering in price of the stocks. Now the manager can slowly get rid of the stocks without losing out on price.