The General tab of the Pair Setup dialog box contains all of the fields needed to set up a basic Pair.

1. Select the Pair Setup icon from the REDIPlus Application bar, and Pair Setup dialog box appears.

•  Alternately, you can access a Pair Setup dialog box by clicking the Pair Setup button on the Spread Trader toolbar.

2. Enter an identifier for the Pair in the Pair ID field. The identifier must be unique in combination with your user ID and the account you select from the Account drop-down list box (see below).

• If the Pair ID field is left blank, an ID will automatically be generated upon submission using the following format:  [Symbol 1]_[Symbol 2]. If the auto-generated Pair ID is not unique, you will be prompted to modify it.

3. Select the Account associated with the Pair; all order executions corresponding to the Pair will be allocated to this account.

• The combination of your User ID, the Pair ID you enter, and the Account you select uniquely identifies the Pair in Spread Trader.

4. Select whether the Pair you are setting up is for Price Differential or Ratio-based trading from the Spread Calc drop-down list box.

5. Enter the symbols of the stocks you want to pair in the Leg 1 and Leg 2 Symbol fields.

6. If you do not know the symbol of the stock, click and perform a search for it; see the Symbol Search topic more information about the Symbol Search functionality.

Once you press [Enter], tab to the next field, or select a symbol using the Symbol Search, data pertaining to the symbol you entered is displayed on the corresponding Quote bar at the top of the Pair Setup dialog box.

The Spread bar (below the Quote bars) reflects the current spread between the different stock price combinations (e.g., Ask – Ask, Ask – Bid, etc.) as calculated based on the Spread Calc, Spread Ratio, and the direction of the currency conversion and Rate you select/enter; see the descriptions of these fields for more information.

• The Spread bar displays the spread between Leg 1 and Leg 2 prices as a currency amount when you select Price Differential from the Spread Calc drop-down list box, and as a percentage when you select either Ratio or Ratio Day Chg.

6. Select a destination for each Leg of the trading Pair from the corresponding Destination drop-down list boxes to the right of each symbol.

7. Select at least one Initiate checkbox to indicate with which Leg trading can be initiated.

• The Initiate 1 and Initiate 2 checkboxes can be selected or cleared at any point in the Pair Setup entry process by clicking them with your mouse, or by pressing the [Alt] + [1] and [Alt] + [2] keyboard shortcuts, respectively.

8. Select a Buy and a Sell Side (e.g., Buy, Buy Cover, Sell, Sell Short, Auto) from the corresponding drop-down list boxes of Leg 1and Leg 2. Whether an order is submitted as a Buy or a Sell depends on whether the transaction is part of the Setup or Unwind for the Pair:

• Setup – Buy Leg 1, Sell Leg 2

• Unwind – Sell Leg 1, Buy Leg 2

If you select Auto in a Side drop-down list box, the Side is determined based on the Leg’s position (e.g., Buy vs. Buy Cover, Sell vs. Sell Short).

9. If you selected Sell Short or Auto from either Leg’s Sell Side drop-down list box, you can enter the Locate ID of the clearance broker for the corresponding stock. Doing so will override the REDI Sell Short logic dictating that when GSS inventory for the stock falls below a certain level, further short selling, and consequently any balancing buys, will be stopped.

10. Select the Round lots only checkbox for each Leg if you want to prevent odd lot orders from being submitted.

• The Round lots only checkbox is cleared by default for U.S. symbols, and selected by default for International symbols.

11. Select the Manage odd lots checkbox to automatically inventory and subsequently submit odd lot shares; inventoried odd lot shares (overage and underage) will be combined with subsequent balance Leg order quantities.

Whether the Round lots only checkbox was selected for the balance Leg affects the processing rules as follows. Note that if lot size = 100, lot size/2 = 50.

• If the Round lots only checkbox has been selected (and the lot size is greater than 2), odd/mixed lots > lot size/2 will be rounded, and odd lots < lot size/2 will be held. Held shares and any share adjustment to odd/mixed lots will be carried forward and applied to the next balance Leg order quantity.

• If the Round lots only checkbox was cleared, odd lots < lot size will be held, carried forward, and applied to the next balance Leg order quantity. Order quantities of the lot size or more will be submitted without rounding, and no odd/mixed lot management is required.

Example (Round lots only checkbox selected and lot size = 100):

• When the execution of a balance order’s odd lot quantity would satisfy the Setup/Unwind Position Objective, the order is sent as is (no adjustment is applied). If only part of the odd lot shares carried forward are required to satisfy the Setup/Unwind Position Objective, that part is applied to the balance order, and the final order is sent.

12. When a Pair includes stocks based in two different currencies, currency conversion is required, and the Ccy Conversion drop-down list box and the Rate field are enabled.

1. Select the direction of the currency conversion [either Leg 1 symbol’s currency to Leg 2 symbol’s currency, or Leg 2 symbol’s currency to Leg 1 symbol’s currency (e.g., Leg 1 Symbol Leg 2 Symbol or Leg 2 Symbol Leg 1 Symbol)] from the Ccy Conversion drop-down list box.

2. The Rate Type drop-down list box defaults to Manual and is protected, indicating that the conversion rate will be based on a value that you enter manually in the Rate field.

3. The Rate field determines the rate to be used for the configured currency conversion. Enter the desired currency conversion rate.

13. The fields in the Pair Parameters group box determine when orders for each Leg in a Pair will be submitted (i.e., in what price range), in what relationship to each other they should be executed (ratio of the quantity or value), etc. Often, multiple fields’ values are combined in the implementation of the trading logic. The table below provides a step/description for each field, including a list of related fields that should be considered when determining the value to enter.

• Separate values can be entered for the Setup and Unwind Pair trading phases.

14. When you have completed the General tab, you can click [Submit] to save the Pair and close the Pair Setup dialog box. Optionally, you can modify the Advanced tab to further configure the Pair.