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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: of 35244  
Subject: Executing Through IB Date: 5/21/2012 10:48 AM
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Both E*Trade and Zions Direct were showing an offer on a bond with a minimum-purchase of five bonds. Both of them were showing an order-book with singles offered at two points higher, the same book that IB was showing. However, just now, I was filled on a limit-order at IB for a single, but at the lower price of a min-5 purchase.

So the numbers look like this. To have executed through ET or ZD would have cost a commish of either $10.00 or $10.95, respectively, whereas the commish at IB was $5. Plus, I got the bond two points lower. So, executing through IB saved me two and a half points.

The bond-game is nothing if not a game of basis-points, in this case, 250 of them in my favor. On bonds with long maturities, 250 bps might not be worth worrying about. But on bonds with shorter maturities, your all-in entry-price matters hugely. IB is a terrible place to do your searching, because of their clunky search-engine. But it’s a good place to execute.
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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: 34112 of 35244
Subject: Re: Executing Through IB Date: 5/22/2012 2:42 AM
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I just found this out from the Discount Brokers board:

http://online.barrons.com/article/SB500014240527487047597045...

Barrons has Interactive Brokers as the best online broker for 2012. Ironically, they mention nothing about the advantages of bond-trading with IB.

It's a bit annoying that to be able to search for the widest range of bonds, you need an account with Etrade or Dions; but to get the best price possible, you need an account with IB. But then with IB, you have the problems persistentone mentioned regarding the River Rock bonds.

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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: 34115 of 35244
Subject: Re: Executing Through IB Date: 5/22/2012 10:55 PM
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It's a bit annoying that to be able to search for the widest range of bonds, you need an account with E*Trade or Zions; but to get the best price possible, you need an account with IB. But then with IB, you have the problems persistentone mentioned regarding the River Rock bonds.

folgore,

You should try to get your facts right before you try to draw conclusions from them.

How many hundreds of bond transactions have you done anywhere? Come on, tell me. How many hundreds have you done?

Do you now have (or have you had in the past) accounts with Schwab, E*Trade, Scottrade, Zions Direct, TD Waterhouse, BrownCo, Fidelity, Interactive Brokers, Datek, etc. plus a couple of bond boutiques whose names I don't remember?

If I say that E*Trade and Zions are the current, best places to do searches, but IB can be a far better place to execute, then those are the facts. But they are not all of the facts, nor, necessarily, the most important ones.

If you want agencies, IB won't quote you. If you want converts, IB won't quote you. Even if IB is quoting a bond that both E*Trade and Zions are, they might not be quoting the best price. Therefore, an investor who is serious about buying bonds opens accounts wherever he or she has to and executes wherever he or she is best served on that particular transaction.

What's hard to understand about that? And why complain, which is pointless? The bond-market has always been, and will always be, an institutionally-dominated market in which the small investor is a barely-tolerated nuisance. That's the market. That's the landscape. Those are the facts. Us small investors who buy our one bond, or two bonds, or maybe five or ten, are despised, scorned, and dis-repected. The big boys would just as soon we all go away and leave them the easy money that comes from abusive spreads, abusive commissions, a dearth of data, etc., etc., etc.

However, I have learned this much. "In adversity, there is opportunity" and them that are willing to fight for a seat at table can play the game and hold their own, even against the big boys. If you want to buy your own bonds, then be prepared to fight for every basis point, on every transaction, and to do whatever you have to do to lower your costs of doing business. If that means opening multiple accounts, then that's what a serious bond investor does. Your choice. If you want the easy, one-account access to markets such as stock or fund investors have, then stay away from individual bonds.

Charlie
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PS How's that 50-share position in FB working out for you? That was easy to get into, right? Click-click, and the shares were in your account.

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