Fixed income mark up/ mark down policy

or Register to post new content in the forum

19 RepliesJump to last post

 

Comments

  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.
Feb 14, 2010 1:34 pm

can you guys post what the max mark up/ mark down is on fixed income at you firms

Feb 14, 2010 2:15 pm

2.5% but it depends on type of fixed income and maturity length

Feb 14, 2010 2:39 pm

As much as they can snake you for. If you  know what you're doing you'll catch them red handed and make them give it back. At least that's what the guy I consider the local bond expert in the next office over from me does. Bonds are his thing. 

Feb 14, 2010 2:51 pm

2% max, unless swapping, them much less.

Feb 14, 2010 4:01 pm

ours is 2% on the buy .5 on the sell on anything longer then 3 yrs

Feb 14, 2010 4:29 pm

mssb is 3 on the buy 1 on the sell

Feb 15, 2010 12:51 pm

When I worked at Morgan Stanley it was like 3-4 on the buy and 3-4 on the sell too.  It was amazing.  It wasn't even that long ago.  You could even set you own price on some preferred stock and just sneak the commission in that way.

 
At Merrill, it takes 8 hours to even get a bid back from a trader and if you get up to get a coffee during the 10 minute window it's good for the bid just expires.  ...so we all just do managed money.  I'm pretty sure it was part of their master plan.
Feb 16, 2010 1:43 pm

At Jones, we charge increasing amounts based on maturity dates ... max being 3%. However we don't have a fixed income overhead to cover, so I really have always wondered how we fare against the comp on exactly equivilant issues.

Feb 16, 2010 1:50 pm
LockEDJ:

At Jones, we charge increasing amounts based on maturity dates ... max being 3%. However we don't have a fixed income overhead to cover, so I really have always wondered how we fare against the comp on exactly equivilant issues.

 
Allegedly. I find this to be a dubious claim by our firm, however.
Feb 16, 2010 1:50 pm
LockEDJ:

At Jones, we charge increasing amounts based on maturity dates ... max being 3%. However we don't have a fixed income overhead to cover, so I really have always wondered how we fare against the comp on exactly equivilant issues.




oh...trust me...you ARE getting fukced.



it is your buddy Nick Retail.

Feb 16, 2010 2:53 pm
SometimesNowhere:
Allegedly. I find this to be a dubious claim by our firm, however.
 
Pretty curious as to why you doubt. But also, fairly surprised that other firms markup a flat fee ... at least because I thought ours was a standard practice.
 
 
Feb 16, 2010 3:09 pm
LockEDJ:
SometimesNowhere:
Allegedly. I find this to be a dubious claim by our firm, however.
 
Pretty curious as to why you doubt. But also, fairly surprised that other firms markup a flat fee ... at least because I thought ours was a standard practice.
 
 
 
I have FA friends at other firms and we will occasionally compare bond prices in inventory. On a regular basis we find that our bonds at EDJ are a couple hundred bps more expensive. One of my friends is at an indy shop with no "inventory", just a guy that goes and buys bonds when needed and those bonds are usually less expensive, even after the markup.
 
It leads me to believe that either our bond desk isn't very good (which I doubt), or they are making money between the buy and listing it in inventory.
Feb 16, 2010 3:10 pm

Does EJ report any proprietary trading profits in their quarterly reports?

Feb 16, 2010 3:19 pm
Wet_Blanket:

Does EJ report any proprietary trading profits in their quarterly reports?

 
Don't know. I don't know that they are doing anything nefarious, I just feel like the "we don't make money on the bond desk" thing is urban legend.
Feb 16, 2010 3:25 pm

From my experience on the Compliance side - usually Fixed Income has the biggest rat-bastards alive.  They screw everyone.

Feb 16, 2010 3:27 pm
Wet_Blanket:

.... usually Fixed Income has the biggest rat-bastards alive. ...

 
LOL - this coming from the Compliance guy. Sorry ... not laughing at you, Wet. I've just had some run-ins with my own FS. And of course, the phrase "rat-bastard" is generally funny ...
Feb 16, 2010 3:37 pm

Okay, I concede.  B/D Compliance and Fixed Income is about the same level of

Rat-Bastardness.  But with B/D Compliance, that Rat-Bastardness originates with FINRA or the Firm, and they are the messenger.  With Fixed Income, that comes directly from Satan.
 
RIA Compliance are the saints - very generous and kind.
Feb 16, 2010 4:06 pm
SometimesNowhere:
LockEDJ:
SometimesNowhere:
Allegedly. I find this to be a dubious claim by our firm, however.


Pretty curious as to why you doubt. But also, fairly surprised that other firms markup a flat fee ... at least because I thought ours was a standard practice.





I have FA friends at other firms and we will occasionally compare bond prices in inventory. On a regular basis we find that our bonds at EDJ are a couple hundred bps more expensive. One of my friends is at an indy shop with no "inventory", just a guy that goes and buys bonds when needed and those bonds are usually less expensive, even after the markup.



It leads me to believe that either our bond desk isn't very good (which I doubt), or they are making money between the buy and listing it in inventory.





I can't speak to govy or corp's but on the muni side it is very transparent thanks to our friends at MSRB and EMMA. Whether our prices are high or low is obviosly up for debate, but there is no additional bond desk markup tacked onto muni bonds. Check EMMA and you can see the bond price reported on both the buy and sell side.

Feb 16, 2010 5:30 pm

This doesn't have anything to do with EDJ making money at the bond desk, but over the past few years I would regularly have the same muni bonds they had, with 1/2 point build into the bond selling at par.  EDJ would have the identical new issue bond at 101 1/2.  I would assume that the broker was getting that markup, but from the client's point of view it's still the same bond, just one of their advisor sells it at par and another has a markup.

 
Even at 200 bps, it's hard to make money selling individual bonds.  At 50 bps, I almost never did it.