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Gilt Bid/Offer Spreads

Gilts, bonds, and interest-bearing shares
GeoffF100
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Gilt Bid/Offer Spreads

#56723

Postby GeoffF100 » May 30th, 2017, 12:24 pm

I hold Treasury 0.125% Index Linked 2029:

http://www.londonstockexchange.com/exch ... upToRow=-1

The quoted bid/offer spread is huge, but all the trades occur within a tight price range. Hargreaves Lansdown shows some of these trades as buys and some as sells. Is the spread big or small?

1nvest
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Re: Gilt Bid/Offer Spreads

#336466

Postby 1nvest » August 27th, 2020, 11:25 pm

Yep still huge spreads. 5% or larger bid/ask spreads in a negative real yield world has Gen Z laughing at the oldies who still follow stocks and bonds instead of the likes of glint, p2p and bitcoins.

Makes one wonder what will become of conventional domestic currencies, stock and bond markets when the next gen prefer to save/invest elsewhere. The state used to promote such domestic based investing, such as being able to buy gilts in Post Offices, or where index linked gilts/savings were widely available to small private investors, nowadays it seems to repel such. As more opt to not have their pensions etc. invested in old institutes such as the stock or bond markets, perhaps those markets have relatively limited public access lifespans remaining.

dealtn
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Re: Gilt Bid/Offer Spreads

#336515

Postby dealtn » August 28th, 2020, 9:40 am

GeoffF100 wrote:I hold Treasury 0.125% Index Linked 2029:

http://www.londonstockexchange.com/exch ... upToRow=-1

The quoted bid/offer spread is huge, but all the trades occur within a tight price range. Hargreaves Lansdown shows some of these trades as buys and some as sells. Is the spread big or small?


Gilts, and linkers, will trade several hundred times a day. The market place isn't on LSE so the very few you will see reported are unrepresentative.

Without wishing to bore you with a long story it's probably best to dummy trade with your usual broker to see what is available to you. Depending on how your broker is set up, and the potential size of your trade, you may get channelled ultimately either to a GEMM sales desk, or electronically to a platform. Most platforms will be for 6 figure minimum trades, or you could get routed via LSE retail. The closer you get to a real market maker, and the larger your trade, the smaller the spread. (In the real world GEMMs will quote close to zero spreads - or did when I was one - as unbelievably the "better" measure of performance was market share, not profitability).

GeoffF100
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Re: Gilt Bid/Offer Spreads

#336559

Postby GeoffF100 » August 28th, 2020, 11:20 am

Thanks for that. I do remember once being told that my trade was large enough to be worth their while, and that I would get a good price. I think that trade was for about £60K. Most of my more recent trades have been in the £20K to £60K range. I was selling in tax shelters, and buying an equivalent amount of 0.125% coupon stock outside. That process is now complete.


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