The more I thought about the differences in bond quotes, the madder I got. So I phoned E*Trade. My first contact person was a customer service rep who didn't know bonds and therefore, couldn't answer my question. So he did the correct thing of connecting me to their bond desk. That person listened to my question and then tried to give me some nonsense about the pricing differences were due to the differences in commissions. Then I quoted the prices on a specific issue to him, the OR State 4.7's of '41, reading from their own offering lists. As an ET customer, the quote to me was 102.127. As a former Harris customer, the quote to me was 100.223. That's a hellacious spread of 1.904 points PER BOND, whereas the commission differences for doing a trade of 5 bonds in either of my accounts would be a measly $4.95. So I asked him again, “Why the spread?” Once he realized I knew what I was talking about and that I wouldn't back away, he immediately became candid. The difference he said was between Agency Pricing and Principal Pricing at which point I interrupted him and said. “In other words, Agency Pricing is what would be the equivalent of the inside market and Principal Pricing includes a markup to which a commission is also applied”. Ruefully, he agreed that such was the case. So, the lesson is this: demand Agency Pricing; don't settle for Principal Pricing. Charlie
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