Recently, I had an opportunity to deal with Over The Counter (OTC) securities.Since they are not listed, prices are quoted in a large band with riders such as minimum ticket size etc.More often than not, prices are unreliable and vanish when you actually place the order.
In such a scenario, the role of the broker/intermediary becomes critical.But how much should he paid?I find this anecdote from George Soros’s life instructive:
My friend’s father asked me to change some dollars and being conscientious I went to the pain of visiting both of the two markets for this sort of thing,the old Stock Exchange and an orthodox synagogue in another part of town.It turned out that there was a significant difference in the exchange rate, and I was able to get some 20 percent more at the synagogue than at the the Stock Market, which was the only rate that my friend’s father knew about.So I brought him the larger amount and said that I deserved a higher cut, but he refused.
“He said,’You are a broker and it’s your job to get the best rate, that is what you are getting paid for.’ I remembered that years later when I became a market maker in over-the-counter securities.,” George Soros observed.”Because if you are a market maker and can make someone an extra 20 percent and raise your own cut by half a percent that’s different and better than being just a broker.So in the end by his refusal to raise my compensation he encouraged me to be a market maker rather than a broker, which turned out to be quite useful and I suppose I was paid for that experience.”
-from the book Soros by Michael Kaufman
Some stuff that I am reading today morning:
Reliance Industries yet to finalise action plan on 4G (ET)
UPA’s bet on good economics (Mint)
Taj’s lease woes continue (BS)
Sujata Patil Vs Cowards (MediaCrooks)
If you can’t get into a top 5 MBA program, don’t even bother (Quartz)
Mohnish Pabrai on checklist investing (Marketfolly)
Why Germany wants its 674 tons of gold back (Wonkblog)
The hottest currency trade in the world (BI)
The six biggest investing lessons of 2012 (TRB)
5 reasons to remain cyclically bullish (PragmaticCapitalism)
This post is in continuation of my coat tailing series (see here)
Credit Suisee is a well known financial institution.It invests in India via Credit Suisee (Singapore) Ltd.It is believed that some Singapore based funds invest in India via this entity as well.
Its portfolio as per stock exchange’s web sites as on Sept 2012 is given below:
||# of Shares
|Shree Renuka Sugar
|Hinduja Global Soln.
|Nava Bharat Ventures
|Indiabulls Fin Serv.
|Dish TV India
|Nitin Fire Protectn
|Gujarat Pipavav Port
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