BUY 1000 MSFT / SELL 2000 INTC.

Also suppose that the national market offers for your order are as is shown in Table 1 below. (To see how these offers were calculated, click here.)

Table 1 National Offers for your Barter Order Buy 1000 MSFT / Sell 2000 INTC Row Number Size (MSFT x INTC) INTC Bid Price MSFT Ask Price Barter Offer Price (MSFT - 2 x INTC) 1 100 x 200 27.00 55.00 1.00 2 250 x 500 26.99 55.00 1.02 3 150 x 300 26.98 55.00 1.04 4 100 x 200 26.98 55.01 1.05 5 400 x 800 26.97 55.01 1.07

Often, there are additional offers that are internal to the BarterSecurities system that will improve national markets by providing either more favorable execution prices, by providing a greater quantity to trade, or both. Certain offers may originate with professional marketmakers. Other internal offers may arise due to outstanding limit orders, either alone or in combination. For example, a limit order to buy INTC and sell CSCO, and a second order to buy CSCO and sell MSFT, may create an implied offer for an incoming barter order to buy MSFT and sell INTC. To learn more, see Order Matching.

Suppose that one marketmaker is willing to respond to your barter order by simultaneously buying 1000 INTC at 27.00 and selling 500 MSFT at 55.00, and that a second marketmaker is willing simultaneously to buy 1000 INTC at 26.99 and sell 500 MSFT at 55.01. In the form of the previous table, the marketmaker offers are expressed below.

Size (MSFT x INTC) INTC Bid Price MSFT Ask Price Barter Offer Price (MSFT - 2 x INTC) 500 x 1000 27.00 55.00 1.00 500 x 1000 26.99 55.01 1.03

The offer prices for your barter order, updated to include the marketmaker offers, are shown in Table 2. Note that the second marketmakers internal response is split into two rows (#4 and #5) because only the first row of the two is necessary to fill your order of 2000 INTC, 1000 MSFT.

Table 2 BarterSecurities Offers for your Barter Order Buy 1000 MSFT / Sell 2000 INTC Row Number Size (MSFT x INTC) INTC Bid Price MSFT Ask Price Order Type Barter Offer Price (MSFT - 2 x INTC) 1 100 x 200 27.00 55.00 National 1.00 2 500 x 1000 27.00 55.00 Internal 1.00 3 250 x 500 26.99 55.00 National 1.02 4 150 x 300 26.99 55.01 Internal 1.03 5 350 x 700 26.99 55.01 Internal 1.03 6 150 x 300 26.98 55.00 National 1.04 7 100 x 200 26.98 55.01 National 1.05 8 400 x 800 26.97 55.01 National 1.07

The introduction of internal offers represents savings to you, the customer. To compute these savings, which are shown in Table 3, the system compares the internal offers to the offers that would have been available for those same shares in the national markets. In Table 3 the first row shows that the first Internal offer

Table 3 Savings from Internal Orders Internal Offers National Offers Weighted Weighted Buy-side Table 2 Barter Table 2 Barter Shares Rows Offer Rows Offer Savings (1) (2) (3) (4) (5) (1) x [(5) - (3)] 500 2 1.00 1,3,6 1.022 $11.00 500 4,5 1.03 7,8 1.066 $18.00 Total $29.00

of 500 shares (Table 2, row 2) takes the place of three national offers of varying share amounts (Table 2, rows 1, 3, and 6). That is, an offer of 1.00 replaces three national offers of 1.00, 1.02, and 1.04. The weighted national offer is 1.022 (i.e., $1.00 x 100 + $1.02 x 250 + $1.04 x 150), so the savings is $11.00 (500 x $0.022). Similarly, the Internal offer of 1.03 (Table 2, rows 4 and 5) would have been traded at 1.05 and 1.07 in the national market (Table 2, rows 7 and 8), implying a savings of $18.00 ($0.02 x 100 + $0.04 x 400) on the BarterSecurities internal side. The total savings for your complete order is $29.00.