As an extension of what you just said and probably a moot point but Plus.net are AIM listed and not in the FTSE 100 any way..

Of course it doesn't suit pr100 on his anti PN campaign to acknowledge that obvious fact. People are just selling their shares to the trader fairies at which point the shares just mysteriously disappear in a puff of smoke.

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Of course it doesn't suit pr100 on his anti PN campaign to acknowledge that obvious fact. People are just selling their shares to the trader fairies at which point the shares just mysteriously disappear in a puff of smoke.

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Anyone who understands how the market worked would know that there are indeed many bluffs (puffs of smoke) in the trading game. And that money does indeed disappear when there is consistent selling pressure. Market makers can lose money. And anyone who's been more exposed to the long side recently has certainly lost money in this stock.

Shares aren't traded directly. They are bought and sold through the same kind of "retail/wholesale" supply chain as TV sets or apples. Stockbrokers are the "retailers" and they simply take instructions from buyers and sellers and do a trade with the market maker ("wholesaler") who sets the spread (buy/sell price differential) for a share - typically by assessing the demand for trades he receives from different stockbrokers. Always, the buyer pays more (ie the top end of the spread) than the seller gets (bottom end of the spread).

Market makers may find buyers to match sellers or they may keep a float - ie they are buying shares without selling them, or vice versa. The float is necessary to ensure that sellers can always dispose of their shares even if there may be currently no demand for them - and it represents both a risk and a possible reward for the market maker.

So if you include market makers as 'buyers' then yes, every share transaction has a seller and a buyer, albeit at different prices because of the spread. But if you mean that every share sold by an owner is bought by a new owner, that isn't the case - at least, not in real time.

Because of the role of the market makers, a day's trading could theoretically be all sales and no buys, as PlusNet's almost was yesterday. A more typical day would see a greater variety in the number of sellers and buyers - see this list of PlusNet trades today where the assumed sells are coloured red and the assumed buys are in blue. Note that a big seller of 73764 shares could only get 101p for them at 10.42am but it looks like the market maker found a buyer for them at 106p an hour and a half later. But for that period of time, such a large chunk of shares without an immediate buyer in sight represented a potential risk to the market maker, hence the low price he was willing to pay for them. For the time that the market maker held on to those shares, they were part of his float. It would of course be interesting to know who the seller was; and even more interesting to know who the buyer was. It's possible that the buyer would be an existing large institutional holder of PlusNet shares who feared that allowing such a large number of shares to remain in the float would drive down the value of his existing shareholding.

More information here.

Simon

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The float is necessary to ensure that sellers can always dispose of their shares even if there may be currently no demand for them

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"Always" is not strictly true because if liquidity is insufficient, sellers may sometimes not dispose of their shares at all (e.g. in a crash scenario such as when Enron hit the floor) or more likely will be quoted at price which is at vast distance from bid. Albeit MMs are normally obliged to make a market and should ordinarily accept all trades at NMS.

Also (re yr latter example) it's not necessarily the case from the print that it was the same MM who took execution on the two trades you've suggested. Albeit it's likely.

Otherwise it's very good summary.

Edited by Nessus (Fri 08-Sep-06 14:30:31)

"It would of course be interesting to know who the seller was; and even more interesting to know who the buyer was."

75,000 would represent a notifiable amount. Odd that one hasn't been seen. A large volume of Pipex stock was traded at 4.30pm yesterday.

TT

Thanks, Simon - that's an admirable summary.

Was the issue price 90p?

If so, it's getting perilously close!

Michael

90p yes. It's only a psychological barrier - but if breached it would possibly accelerate the fall.

Simon

Plusnet customers are profitable whilst Bulldog have lost buckets of cash for every one they signed up so that must factor into your equation somewhere?

I don't think so, it was the marketing cost and rollout cost that killed them, once they've got them then I'm sure they are at least profitable if you don't include the capex of the LLU network with them.