Deck

What Is a Deck?

A deck, also known as a broker's deck, is the number of open orders that a broker is working with at any one time. A broker with a large deck must efficiently find buyers and sellers for securities, or risk the cancellation of orders. More experienced brokers can operate with larger open positions if they are certain in their ability to find counter-parties.

How a Deck Works

A floor trader works with orders, referred to collectively as a deck, received from clients requesting certain securities be bought or sold. While they work for one of the various stock exchanges, such as the New York Stock Exchange (NYSE), floor traders work only on the accounts they have secured for themselves.

Brokers with a large deck may find holding too many orders to be inefficient or challenging. As a floor trader (FT), the broker works to fill both buy and sell orders as they are received. This requires a high level of interaction with various parties that are interested in making the trade as well as significant research dedicated to each order that is currently held in the deck.

A larger deck means that the broker is managing a higher number of orders. This higher level of demand may make it difficult to secure the best deals for every open order available to the broker and may make tracking transactions less efficient.

Example of Orders in a Broker's Deck

For example, if a floor trader has an open order for Company A and Company B, it may not be possible to look at fulfillment options for both requests simultaneously. Instead, the trader may have to switch back and forth between the requests or focus on one until completion and then move to the next. While working on the order for Company A, a favorable opportunity may open for Company B. Depending on where the trader is with the Company A order, he may not be able to capitalize on the opportunity for the Company B order.

Another example would be if the broker has a buy order in company A with a limit of 82.50 for a customer and a sell order for company A hits the broker's deck with a limit of 82.48, the broker will cross the orders mid-market at 82.50 when the quote is inline. By crossing an order, transaction costs are lower for the broker relative to working the orders on the screen (exchange).

Exchange Shutdowns

Based on the availability of certain securities on multiple exchanges and the growing dependency on technology in the trading arena, a broker with a large deck may experience more missed opportunities in the event a technical issue shuts down an exchange.

For example, on July 8, 2015, the NYSE halted operations for approximately three hours. During that time, other exchanges, such as the Nasdaq, continued to trade NYSE-listed stocks as the technical issues did not limit the function of other exchanges. This could cause significant price fluctuations that could affect a trader’s ability to complete an order once service was restored.