At the Around-Time of an auction, the originating broker reviews the bid pad and evaluates the bids in the system. The broker compares the high bid and cover bid to any of the following: internal RW Smith history, like items that RW Smith has out for the bid that day, recently traded items by RW Smith (within a relevant time frame), MSRB pricing history (within a relevant time frame/interdealer pricing only), MMD scales, economic indicators, economic news, and/or relevant market information. If the broker determines that the price appears reasonable (i.e., a mistake has not been made in the bidding process), then the RW Smith broker phones the originating client (potential seller) and reflects the high and cover bid less the RW Smith commission. If a broker believes an error may have been made during the bidding process they are required to follow company policy when verifying bids.
When turning in, or submitting, a bid to the potential seller RW Smith brokers are required to review the following specifics on each bid wanted item:
- Quantity (aka Par Value)
- FULL security description, including call features, etc.
- Special settlement date, if one was requested by the seller
- Dollar price bid less commission
- All specifications placed on the bid by the bidder
- Flat indicator, if bid was specified Flat (meaning no interest)
Specified bids: If the seller will not accept the bid with specification(s), the RW Smith broker must phone the high bidder to inform them that their specified bid will not be accepted. The RW Smith broker must then ask the high bidder if they are willing to lift their specification(s). If the client agrees, call the seller back and turn in the unspecified high bid. If the bidding-client refuses to lift the specification (s), the (unspecified) cover bid is then turned in to the potential seller as the new high bid.