Quote driven second market vs. Third Market

Discussion in 'Trading' started by cqm, Feb 13, 2012.

  1. cqm



    So the second market's fundamental problem is that it is supply and demand quote based. Simply placing a large enough order will knock out one side of the book causing price to fluctuate

    whereas a block trade negotiated in the third market can just be a large order sent to someone else. Not touching the book.

    so does that mean it is possible to load up a large position in the third market, and hit the tape in the second market? Perhaps you buy options in the second market and wait for the volume to be just right so you can dump your equity position and profit from the options?

    I know you might be THINKING market manipulation, but forget about the SEC, this is more so theory that could be applied to any similarly structured market in any jurisdiction in the world

    am I correct in how this would function?
  2. Yes. But you can do this all in the secondary market alone.
  3. Problem is when you will take the position in the 3rd market they will know who you are and if you play this game they will understand it quickly and you will lose all respect and relationships and no one will want to deal with you ever.