what limit order is? Thanks.
why order driven market with limit order will lack transparency? Thanks. MFIN— Wrote: ------------------------------------------------------- > lol > http://www.investopedia.com/terms/l/limitorder.asp
What do you mean transparency?
order-driven market has transparency risk because lack of developed market making requires placing market orders as opposed to limit orders… But I don’t get the point… Chuckrox8 Wrote: ------------------------------------------------------- > What do you mean transparency?
if you have an order driven market a central order book is created where outstanding limit orders can be seen by all participants. This creates transparency risks as those who wish to enter into large trades will have those trades seen by the market and someone could step in front of them and offer them poor prices. Now, in a price-driven market, brokers usually buy and sell the shares at certain prices. Because of this, a broker can “work” an order by slowly buying or selling a large order without letting the rest of the market participants know how large or at what prices the order was.
thanks! the anominty is totally a different thing than this transparency risk? Thanks. piwanowi Wrote: ------------------------------------------------------- > if you have an order driven market a central order > book is created where outstanding limit orders can > be seen by all participants. This creates > transparency risks as those who wish to enter into > large trades will have those trades seen by the > market and someone could step in front of them and > offer them poor prices. > > Now, in a price-driven market, brokers usually buy > and sell the shares at certain prices. Because of > this, a broker can “work” an order by slowly > buying or selling a large order without letting > the rest of the market participants know how large > or at what prices the order was.
well the transparency risk is that in an order driven market, the large blocks are transparent, market participants can see them and will anticipate those flows. For example, big order comes on book to sell, market participants will sell in lieu of the new supply of shares, and the original order will get a bad price. This is the transparency risk of an order driven market. In a price driven, that cost isn’t there. Not the broker may charge higher fees than the electronic trading market of an order-driven system, but thats the type of trade-off that exists.