No Big Deal?

Here at Sharemark, we couldn’t do what we do without the services of stockbrokers and we’re lucky enough to be owned and operated by The Share Centre. This month I thought I’d take it back to basics; I’ve had a chat with Chris Hutsal, Head Dealer at The Share Centre, and can bring you an intriguing insight into what goes on behind the scenes when you buy or sell investments and a few things you should be aware of.

Placing an order

The Share Centre processes thousands of orders on a daily basis and these days the majority of them (approximately 78%) are dealt electronically, with investors using computers and increasingly, tablets and mobile phones to place deals over the internet. This is much more straightforward than a few years ago when all deals would come in over the phone and the dealers would then only be able to complete the order via the phone direct to a market maker.

As an investor placing orders online with The Share Centre, you can receive a quote to buy or sell, getting ten seconds to either accept or decline the price given without any intervention being required on your behalf by the dealers. If you accept the price, you’ll get confirmation of the deal and a contract note will be emailed or sent to you in the post. This choice is great for investors as it puts them in the driving seat.

There are exceptions to this process as sometimes it is not possible to obtain a live quote for shares requested by The Share Centre’s investors. For example, if a stock’s price is moving quickly or if you are dealing in more shares than the market maker is willing to quote for, The Share Centre would then have to phone the market maker in order to obtain the best price available.

The phone’s still ringing

Even though the majority of orders are now placed over the internet, The Share Centre clearly still has a need to maintain a dealing team which takes orders by phone where preferred by its clients. They also answer any queries investors may have. The team strives to maintain strong relationships with all of the market makers, which is of benefit when the need arises for the dealers to liaise with them directly. Whenever an investor asks for a quote (whether it be electronically or over the phone), the dealing team polls all of the market makers who are quoting in that stock and will return the best quote available, regardless of whom the market maker is.

For the most part, this polling is also actioned electronically, however The Share Centre has many clients who favour smaller cap shares and often these cannot be traded online. In this scenario, the dealing team has to phone the market makers to obtain the best price, although if the investor is dealing outside of the Normal Market Size (NMS), they may have to deal outside of the quoted price.

Occasionally, an investor might make an error such as buying the wrong amount of shares or selling rather than buying. If this is the case, then it really helps to have a member of the dealing team at the other end of the phone to cancel an order. More often than not, they are able to do so, much to the investor’s relief!

Your order’s too big!

Sometimes, if an investor is dealing in a large amount of shares, it is not always possible to fulfill the order straightaway. The dealing team may only be able to complete part of an order. In this situation, the balance of the order has to be left with the market maker who tries to complete the transaction as soon as possible. The dealing team recommends placing limits on orders in this scenario!

The Share Centre has a wide client base, ranging from day traders through to the occasional investor. On your behalf they can invest in a wide range of products including UK Equities, Gilts, Corporate Bonds, ETFs, Covered Warrants, European and North American shares and funds.

polls all of the market makers

dealing with investor errors

Written by Sophie Murra

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