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Author: persistentone Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 35400  
Subject: ETrade Bond Book Date: 5/4/2012 4:20 PM
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I got an account with ETrade after hearing from so many of you that this is the platform of choice for bonds. What I really like so far:

1) Through the bond research area, you have access to Moody's reports. That's at least $5K of value right there.

2) The bond order platform exposes an order book!! Moreover, when I place a limit order on Interactive Brokers and fine tune it to reflect the top of the ETrade book, my order appears in the ETrade book.

Wow, I pause for a moment of silence in respect of a moment of competition in the bond market. May there be other similar moments.
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Author: trader2012 Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 34040 of 35400
Subject: Re: ETrade Bond Book Date: 5/4/2012 9:27 PM
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As I have been saying for a long, long time, the obvious solution for anyone who is serious about bonds is accounts at all three. But if only one account is to be set up, the choice should be E*Trade. (IMHO, 'natch.)
	
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E*Trade ZionsDirect IB

Can see the order book? Yes Yes Yes
Can download the output of a scan? Yes(1) Yes Yes
Can access Moody's reports? Yes No No
Can see T&S? Yes(2) No Yes
Breadth of inventory? Excellent Excellent Weak
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(1) Only grandfathered accounts.
(2) Only past 30 days.


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Author: persistentone Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 34042 of 35400
Subject: Re: ETrade Bond Book Date: 5/5/2012 1:29 AM
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Does anyone know the trick to seeing a bond order book on Interactive Brokers?

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Author: altstrat91 One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 34044 of 35400
Subject: Re: ETrade Bond Book Date: 5/5/2012 8:36 AM
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i realize supply can dynamically change in real time. but at any one given moment, if you did a scan, who has the most available possible offerings given the parameters of your scan. is it etrade, zions, or something else? is there a free site the cxa marketplace to do scans of real inventory?

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Author: trader2012 Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 34045 of 35400
Subject: Re: ETrade Bond Book Date: 5/5/2012 11:41 AM
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...at any one given moment, if you did a scan, who has the most available possible offerings given the parameters of your scan?

alstrat91,

Depending on whether it's agencies, munis, or corporates you're looking for, either E*Trade or Zions Direct can be equivalent in terms of the inventory they offer, and both offer far more inventory, more easily accessed by small accounts and then acted upon, than any broker I'm aware of. Where you will see differences between the offering-lists of the two is in tiny lots held in-house. But if either is simply acting as agent, rather than principal, then both are quoting from the same network of underlying desks (which any other broker should be able to make available to its customers, but for reasons unknown to me, don't).

If you're a "whale", or merely buy your bonds in larger sizes, then there are plenty of bond boutiques with Bloomies that could put you into more inventory than ET or ZD. But for 99% of bond investors, ET or ZD is the place they should be.

Charlie

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Author: persistentone Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 34046 of 35400
Subject: Re: ETrade Bond Book Date: 5/5/2012 2:47 PM
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ETrade and Zions are both simply pretty user interfaces that sit in front of a wholesale bond exchange from BondDesk Group. 98% of what you see on these sites is NOT their own inventory. They are simply reflecting a marketplace that many entities have access to. In some cases, a broker might have its own inventory on hand and be able to show that to you. It's such a small consideration it should not factor into your decision.

If you are serious about buying and selling individual bonds, then what I would suggest you do is use three tools:

1) Interactive Brokers (IB), because you can simulate good to cancel limit orders and it minimizes your intervention and hassle in trades that may take weeks to play out.

2) E*Trade, for access to Moody's research and in order to see the BondDesk order book, which will quickly help you to see whether your trade on IB is getting through to BondDesk. If not, there might be some way to place multiple trades in multiple accounts and have that force the bid or offer onto an exchange. I have not tried that.

3) Learn to use FINRA TRACE, because that will tell you where the real market for the bond is.

The River Rock bond yesterday was being quoted 66 to 80!!! My broker quoted me 78. I was able to use the above tools to see the real market was 68 to 69.5, if you were a stingy buyer.

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Author: folgore Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 34048 of 35400
Subject: Re: ETrade Bond Book Date: 5/7/2012 1:48 PM
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The River Rock bond yesterday was being quoted 66 to 80!!! My broker quoted me 78. I was able to use the above tools to see the real market was 68 to 69.5, if you were a stingy buyer.

Today, Etrade lists the value of my River Rock bonds at 72 each. On the search engine, though, they're still selling at 80; I also see a 67.25 value, which, I assume, is what I would get if I sold my bonds today. At least they're selling individual bonds today instead of minimum lots of 25 as I saw last week. I assume these wide spreads are the result of bonds being so thinly traded compared to stocks?

So, IB is the only brokerage that allows you to put in a limit order for a bond?

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Author: altstrat91 One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 34049 of 35400
Subject: Re: ETrade Bond Book Date: 5/7/2012 2:00 PM
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"But for 99% of bond investors, ET or ZD is the place they should be."

how would you rate inventory of fidelity versus ED and/or ZD? is there any difference in investment grade versus say high yield/junkier quality?

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Author: persistentone Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 34050 of 35400
Subject: Re: ETrade Bond Book Date: 5/7/2012 2:11 PM
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I think the wide spread is the result of both thin trading and also FINRA rules designed to suffocate liquidity. For example, I had a limit sell order at 78% of par open for two weeks on IB and it never appeared on the order book at all. FINRA forbid IB from posting my ask.

IB is the only broker I know about that puts in limit orders for bonds, at least for retail customers. Keep in mind that IB is driven by technology only. They have almost no customer service, and they won't hand hold a bond order for you. When their system works, it is fantastic. When it doesn't work, they have nothing but excuses. They also do not trade convertible bonds (a major deficiency for me).

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Author: trader2012 Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 34051 of 35400
Subject: Re: ETrade Bond Book Date: 5/7/2012 5:43 PM
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How would you rate inventory of Fidelity versus ED and/or ZD? Is there any difference in investment grade versus say high yield/junkier quality?

altstrat91,

The last time I compared Fidelity to ST, ET, and ZD, Fidelity still lagged in terms of providing inventory to their customers. That might have changed, but I doubt it. Also, their search-engine is clunky, though they do some interesting proprietary things about flagging "outliers".

Again, as I have said many, many times, a serious investor opens however many accounts, wherever he/she has to, in order to execute efficiently. If that means six accounts or ten accounts, or whatever, that's what is done, because no broker is best for everything. Each has its strengths and weaknesses. But if an investor is interested in buying individual bonds, and if he she wants to deal with the current best brokers for bonds, then he/she will open an account at ET or ZD (or both).

If that same person is also trading stocks or futures or options, then IB is a necessity as well that gives the benefit of being a decent place to execute bond orders (buy or sell) *provided* they are quoting the bond and/or haven't flagged it on the quote line as "non-executable". That's IB shortfall. They don't quote as widely as ET or ZD, nor will they execute as widely even if they are quoting. But as someone or other mentioned, they are a good shop to deal with, and I've had an account with them maybe ten years now.

Charlie

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Author: persistentone Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 34053 of 35400
Subject: Re: ETrade Bond Book Date: 5/8/2012 5:09 PM
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Another point to mention is that IB is a LOUSY place to hold a bond that has any kind of special corporate action.

1) IB has no bond desk and they are not proactive in many cases

2) When there are corporate actions and you challenge them about these, they almost always get it wrong.

3) You have to fight actively with them proving to them that their reading of some announcement is incorrect to get them to take any action.

I spent six months with them explaining how Bloomberg had made a data entry error on a bond description, and something they classified as 144A was actually freely tradeable. It actually took my making phone calls to Deutsche Bank and getting names and phone numbers of people they could verify the facts with to get them to change.

IB will spend five minutes to solve every problem, and their solution 90% of the time is whatever easy answer makes the problem go away (for them not for you).

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