Installments pricing and buying - Simon perhaps you are the best person to answer this

[PaulC]

Hi All. I have a query about purchasing installments. If you place an order on a share installment (lets assume you use the matrix and order at the current market value) does std bank go into the market and purchase the shares and then issue the installment OR does the system wait until someone else is selling the installment at your purchase price (similiar to warrants where the market maker never seems to make the market when you want :) ) With futures the market maker goes into the market and purhchases the shares then issues the future (at least thats how I understand it) My question is do installments work in the same manner? - Paul C

[Preston]

Hi PaulC. Installments are not actual share. It is merely a geared product where movement is determined by the underlying shares. It works more or less on the same principle of a forward cover where movement is determined by exchange rate. The answer is NO , standard Bank do not actually purchase the shares.

[SimonPB]

the issuer does purchase the shares, and with instalments on a 1:1 ratio. What happens; they check the underlying bid/offer and volume and using the matrix place a instalment bid/offer int eh market. if you hit their bid/offer (or if the price moves and hits you) they immediateky buy/sell the underlying.

[PaulC]

Thanx, Thats what I wanted to know. Much appreciated guys.

[Preston]

Simon from my previous discussion relating to share installments. You indicated that all installment has a "put element" in it and the only time the actual share are purchased is when the Buyer exercise his choice upon expiry.

[#6]

Miss Pressie, leave the technical issues for those who know

[Preston]

Not today bro, Time to make money.

[SimonPB]

preston, there is a put element. This is there so that you can not loose more then your initial investment. But the issuer buys the shares immediatey you buy the instalment and sells as you sell.