Lpl bond platform

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Dec 28, 2006 7:50 pm

any insights into the lpl bond trading desk....am in recruiting phase and from what i can tell..they do not maintain any inventory...and they charge a quarter to a half to just pick up an offering off the street..from retail perspective if i am just selling off the offer and paying their traders on top of it aren't i gonna stick out ?? {bond people might relate more to this forum}..i mean how am i gonna be competitive selling bonds at lpl..{ such a platform seems to suit fee based more than transaction oriented reps...i am 100% transaction oriented but looking to convert to fee based..just concerned about starving in the meantime}...any inputs...? any one doing a lot of fixed income at lpl....what are your thoughts??

Dec 29, 2006 8:39 am

good question. any thoughts?

Dec 29, 2006 10:46 am

Bonds are not a large part of my business.  In general, though, I haven't found it to be a problem.  Don't forget that if you're at a wire, that trader is probably putting a point or two in that bond that he has in inventory for you.

The LPL platform allows you access to a large inventory that is held at multiple firms.

I also have found no problem getting trades executed, in either direction.

Dec 29, 2006 11:38 am

What about new issue preferreds?

Dec 29, 2006 3:44 pm

Actually LPL only allows reps to access bonds from 1 vendor, namely the municenter....for everything else they ask you to call the trading desk...{ the municenter does allow mulitiple firms to upload their inventory but only a few firms actually do and there is no obligation for them to mark bonds to market i.e prices can be off by quite a big margin and you find yourselves in a truly buyer beware market.} any bond guys here?? 

Dec 29, 2006 5:11 pm

Jeno, of the bond trades I've done online, I've found them to be in line with the market and I don't believe that you'll stick out.  Then again, I can't tell you the last time I had to bid competitively for a deal...my clients are loyal and in return, I don't over-mark my bonds.  Every once in awhile, you'll see a bond priced away from the market and a quick call to a trader will verify that.  I actually tried to order one that was priced very attractively and it was rejected with a note that the price was stale, so what you are hearing is correct.  The online inventory is fine, but if I'm looking for something that I don't see, the bond traders can generally find it for me.

Dec 29, 2006 6:53 pm

Who sells bonds anymore? Join the 21st century.

Dec 30, 2006 9:48 am
joedabrkr:

Bonds are not a large part of my business.  In
general, though, I haven't found it to be a problem.  Don't forget
that if you're at a wire, that trader is probably putting a point or
two in that bond that he has in inventory for you.






Not at Merrill!  No mark ups at the bond desk Our muni inventory
is our own, plus we show multiple firms and there prices, so we can buy
them and see no mark up.  (very few peopel know this).

Dec 30, 2006 11:30 am
rightway:
joedabrkr:

Bonds are not a large part of my business.  In general, though, I haven't found it to be a problem.  Don't forget that if you're at a wire, that trader is probably putting a point or two in that bond that he has in inventory for you.




Not at Merrill!  No mark ups at the bond desk Our muni inventory is our own, plus we show multiple firms and there prices, so we can buy them and see no mark up.  (very few peopel know this).


no markup??


Dec 30, 2006 3:57 pm
whalehunter:
rightway:
joedabrkr:

Bonds are not a large part of my business.  In general, though, I haven't found it to be a problem.  Don't forget that if you're at a wire, that trader is probably putting a point or two in that bond that he has in inventory for you.




Not at Merrill!  No mark ups at the bond desk Our muni inventory is our own, plus we show multiple firms and there prices, so we can buy them and see no mark up.  (very few peopel know this).


no markup??




My thought exactly!

Dec 30, 2006 10:24 pm

Rightway,


Wednesday, go in and pick a bond, either actually buy it, or just call down to the bond desk for a bid as if you own 50M of them. Just see if they offer you what they're asking for it (strip out the point that they're pretending to pay you for it, when they're actually paying you 40 beeps).


What's the bid ask spread on institutional Treasuries? How many times higher is the spread that your bond just showed? That's what one might just say is a MARKUP.


I use Bonddesk. I find that it is miles ahead of the offerings I used to get at Barney (and they were pretty good, far as I knew).


Mr. A

Dec 31, 2006 1:02 pm

I know what a MARKUP is.



I will get something from ML and post it up here if I can supporting my
claim.  I know the Muni desk does not mark up the bonds there
prior to delivering them to us (unlike nearly all other firms), they
leave that to the rep in commission accounts.  I also run pretty
much everything in discetionary advisory accounts, so we cannot put
bonds where ML is acting in agency capacity in those accounts (marked
by ML or the rep.) Treasuries and Corporates are the same.  I will
see what I can find next week.  

Dec 31, 2006 1:47 pm

So when you sell a bond to the desk for 98 less a half and they offer it back to you at par with a point there is no markup??

Dec 31, 2006 1:50 pm
whalehunter:

So when you sell a bond to the desk for 98 less a
half and they offer it back to you at par with a point there is no
markup??





No markup, just really wide bid/ask spreads.

Dec 31, 2006 5:16 pm
whalehunter:

So when you sell a bond to the desk for 98 less a
half and they offer it back to you at par with a point there is no
markup??





Oh my GOD will you please stop tossing examples of marking bonds up here, I KNOW WHAT IT IS!



This is an example of both the desk and the rep marking the
paper.  In your example they buy it from my client at 98 for which
I get multiple bids (as it shows on their statement), and sell it back
to me at 98.  I don't mark it up because I cannot (advisory
account) and neither does the desk.  I don't know what to tell
you, thats how it is.  Maybe I am confused because I do not
operate in traditional brokerage accounts, only advisory fee based. I
will check on it folks.



Happy New Year!

Dec 31, 2006 6:51 pm
rightway:
whalehunter:

So when you sell a bond to the desk for 98 less a
half and they offer it back to you at par with a point there is no
markup??





Oh my GOD will you please stop tossing examples of marking bonds up here, I KNOW WHAT IT IS!



This is an example of both the desk and the rep marking the
paper.  In your example they buy it from my client at 98 for which
I get multiple bids (as it shows on their statement), and sell it back
to me at 98.  I don't mark it up because I cannot (advisory
account) and neither does the desk.  I don't know what to tell
you, thats how it is.  Maybe I am confused because I do not
operate in traditional brokerage accounts, only advisory fee based. I
will check on it folks.



Happy New Year!



Rightway if you're talking advisory that's an entirely different animal.  They CANNOT put anything in those trades because in that particular instance you and the firm are a fiduciary.  At many firms these trades go through an entirely different desk.  That's also why you get bids from multiple firms, so as to fulfill your duty as fiduciary to get the best execution.  It's a big deal.  It's such a big deal that it is (in part) I suspect why LPL does not carry it's own inventory.  They act as agent on all trades, whether brokerage or advisory.

Hope that helps to clear things up.

Jan 1, 2007 10:23 pm
joedabrkr:

  It's such a big deal that it is (in part) I
suspect why LPL does not carry it's own inventory.  They act as
agent on all trades, whether brokerage or advisory.





Another reason is so as not to have to mark-to-market huge portfolio's
of bonds that you are activly trading. Major accounting nuisance.

Jan 3, 2007 2:33 pm
rightway:
joedabrkr:

Bonds are not a large part of my business.  In general, though, I haven't found it to be a problem.  Don't forget that if you're at a wire, that trader is probably putting a point or two in that bond that he has in inventory for you.




Not at Merrill!  No mark ups at the bond desk Our muni inventory is our own, plus we show multiple firms and there prices, so we can buy them and see no mark up.  (very few peopel know this).


Wrong, your desk is marking the bonds up and not showing this to you. Merrill, as with all the wires, operate their bond trading desks as profit centers. UBS was putting two points on some bonds, actually most bonds. All, the wires, as with all the regionals, own their own inventory. This is actually one of the reasons for the markup. It cost money to carry the inventory. Plus the costs of repricing the bonds if the market moves away from them. Usually they don't have to reprice because some noob will solve their problem for them, but it's still a cost. Add in profit, on which most of your trader's income is based, and their is plenty of markup on wirehouse bonds. The trader's job is to turn a profit trading bonds for the house. With the wires there is a built in supply of FA buyers. And, by the way, they could care less if they screw your client. Which is why you need to care.

Jan 3, 2007 2:37 pm
Lex123:

Who sells bonds anymore? Join the 21st century.


I sell bonds everyday. I must have missed the memo that bonds are out of vogue this season.

Jan 3, 2007 3:54 pm
BondGuy:
Lex123:

Who sells bonds anymore? Join the 21st century.

I sell bonds everyday. I must have missed the memo that bonds are out of vogue this season.


...I wondered when you'd jump on that...