Well the broker would have to discuss the order with the client and the potential liquidity issues and slippage. No retail client would have an order of that size, so an institutional client would know the potential problems of executing such an order anyway. Your questions regarding legallity seem strange. No one would want to give you advice or ideas on what some one could do illegally if so inclined. Brokers are NFA regulated and are required to be fit and proper in their roles. Check out the NFA's site and they might be able to help you answer those kinds of questions in terms of what brokers are legally supposed to do. If any of your ideas about this subject contradict the code of practice for a broker, then common sense would say it's illegal...... http://www.nfa.futures.org/
What do you mean? It makes sense to learn what's illegal and what's legal for educational purposes... What about Moore Capital? In their trade with GS their practice was deemed as legal: http://online.wsj.com/article/SB10001424052748704289504575312452485699806.html?dbk But in commodities, Pia's trades were considered as illegal... to me they are all the same...
Big orders get done OTC as block trades. A good OTC broker is very discreet and does not trade their own accounts. Tradition FS or Garban/ICAP come to mind.
"Do those OTC trades have to be reported to CFTC within 5 min and counted in daily volume?" Depends if they are bilateral or financially-cleared through London Clearing House (ICE Swaps) or ClearPort (CME). And that is determined by the broker through counterparty preference and agreement.
Looks the new law is requiring all of them to be reported in 15min? http://www.risk.net/risk-magazine/news/2026292/cftc-trade-rules-create-winners-curse
Anybody cares to explain why what MS did was wrong and what could be their economic motivation of doing those? http://www.futuresmag.com/News/2010/4/Pages/Morgan-Stanley-agrees-to-14-million-civil-penalty.aspx
Circumstances Under Which ICAP May Act as Principal and its Handling of Any Resulting Positions Because ICAP acts as a broker, it is the beneficiary of a waiver of certain capital requirements to which it would otherwise be subject under the supervision of the UK Financial Services Authority. In order to satisfy the requirements of the waiver, ICAP must adhere to certain restrictions on its risk-taking activities. As a result, ICAP does not engage in proprietary trading, i.e., it does not systematically initiate or carry positions for its own account solely for the purpose of putting the firmâs capital at risk or to earn a profit based on a view of the market. ICAP therefore does not operate a âtrading book.â However, ICAP may and does from time to time, consistent with the requirements of the waiver, acquire unmatched positions as principal in the following scenarios: When facilitating customer transactions in âmatched principalâ marketplaces by framing markets. When framing markets in âmatched principalâ marketplaces, ICAP posts or provides live, executable bids and offers at minimum acceptable quantities in an effort (i) to display appropriate markets where none exist, or (ii) to present spreads that are more reflective of market sentiment. In such cases, ICAPâs efforts are intended to add liquidity for ICAP customers and to attract market participants to its screen. Sometimes the act of posting or providing quotations may result in ICAP acquiring a position as principal on an unmatched trade; As a result of errors or out trades. From time to time, as a result of a bona fide error, ICAP may in âMatched Principalâ or exchange-based âName give upâ marketplaces acquire a position in resolution of such error; and Facilitating and executing orders on behalf of customers prior to those positions being novated, given-up or settled by the relevant customer(s) and/or for the purposes of gaining the customer(s) access to any applicable clearing and settlement system. http://imd3.us.icap.com/trader/practices.html I was surprised when I stumbled upon it a year ago.