<s> Professor Larry Harris
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TRADING AND EXCHANGES:Market Microstructure forPractitionersLarry HarrisFred V. Keenan Chair in FinanceMarshall School of BusinessUniversity of Southern CaliforniaMarch 5, 2002 DraftForthcomingOxford University PressFall 2002
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This book is dedicated tothe memory ofthe victims of the September 11, 2001 terrorist acts inNew York, Virginia, and Pennsylvaniaand tothe honor ofthose people whose heroic actionson that day saved so many lives.
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AcknowledgementsMany people contributed to the success of this project with their encouragement, advice,knowledge, and expertise. I would not have started this project without their interest, and Iwould not have completed it without their support. The book is much better for theircontributions.I received my first encouragement as a graduate student at the University of Chicago, long beforeI knew anything about market microstructure. Professor Arnold Zellner advised me to publish abook based on lectures I would give when I became a professor. Although it seemedunimaginable to me at the time, I never forgot his advice or his confidence in me. I look forwardto the time when I will read a book written by one of my students.Several publishers suggested that I write this book. I particularly appreciate the interest shownby editors Mike Junior, Randall Adams, Maureen Riopelle, Kenneth MacLeod, and PaulDonnelly. I have no doubt that they all would have been very helpful in the development of thisbook. I regret that I could not work with them all. Their encouragement, enthusiasm, and visionhelped kindle and sustain my interest.This book would not have been possible without the many insights that I learned from myacademic colleagues. I especially appreciate the lessons that they taught me, and the strongexpressions of interest and valuable constructive criticism that they have given me. I wish toacknowledge the following colleagues by name:Anat AdmatiYacob AmihudJim AngelGail BelonskyHank BessembinderBruno BiaisFischer BlackBernie BlackMarshall BlumeMichael BrennanCorinne BronfmanMark CarhartHenry CheesemanKal CohenHarry DeAngeloLinda DeAngeloIan DomowitzRob EngleWayne FersonMendy FygensonSteve FiglewskiMargaret ForsterDoug FosterJennie France
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Bill FreundStuart GabrielAnn GilletteTom GilliganLarry GlostenCharles GoodhartSandy GrossmanJoe GrundfestEitan GurelYasushi HamaoPuneet HandaJoel HasbrouckKaj HedvallPierre HillionCraig HoldenKose JohnCharles JonesAvner KalayEugene KandelJon KarpoffDon KeimLaura KodresPete KyleJosef Lakonishok
Ruben LeeCharles LeeBruce LehmannKen LehnMarc LipsonAndy LoFrancis LongstaffBob LucasCraig MacKinlayAnanth MadhavanSteve ManasterTerry MarshTom McInishHaim MendelsonMorris MendelsonBob MillerMert MillerDavid ModestDale MorseBelinda MucklowHarold MulherinRob NealAnthony NeubergerMaureen O’Hara
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J. PeakeAndré PeroldMitch PetersenPaul PfleidererAvri RavidMark ReadyJay RitterKevin RockAilsa RoellTavy RonenEhud RonnMark RubinsteinTony SaundersMyron ScholesEduardo Schwartz
Bob SchwartzBill SchwertDuane SeppiKuldeep ShastriAlan ShapiroEric SirriSy SmidtVernon SmithChester SpattSanjay SrivastavaJim StancillLaura StarksDave StewartHans StollRené Stulz
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Avanidhar SubrahmanyamSheridan TitmanWalt TorousAnand VijhS. ViswanathanDan WeaverMark WeinsteinIvo WelchIngrid WernerRandy WesterfieldBob WhaleyDavid WhitcombJoe WilliamsBob Wood
This book would not have been creditable were it not for the many practitioners and regulatorswho have shared their time with me to explain what they do. I particularly appreciate thegenerosity and encouragement that following individuals have extended to me:Stanley AbelHoward BakerFrank BaxterBrandon BeckerGil BeebowerJeff BentonDale BermanCharles BlackDavid BoothHarold BradleyKurt BradshawPearce BuntingRichard CangelosiJim CochraneDavid ColkerCromwell CoulsonLarry CuneoDavid CushingHarry DavidowPina DeSantisMike EdlesonTom FayJim FarrellGene FinnEd FleischmanRuss FoglerGifford Fong©2002 Oxford University Press
Stuart FraserDean FurbushJim GallagherGary GastineauBrian GearySteven GiacomaJim GilmorePhil GinsbergGary GinterKeith GogginWendy GrammDick GrassoBob GreberLeo GuzmanSpence HiltonDave HirschfeldBlair HullBilly JohnsonRick KetchumRick KilcollinRay KillianHoward KramerKen KramerArthur LeavittCharlie LebensMarty LeibowitzDave Leinweber
Rich LindseyEvelyn LiszkaBob LittermanBill LupienBernie MadoffPeter MadoffSteven MalinDavid MalmquistTim McCormickDick McDonaldDick MichaudMark MinisterNate MostAnnette NazarethGene NoserBill PrattEddie RabinMurali RamaswamiBill RyanHenry SasserEvan SchulmanAndy SchwarzChristina SciottoJim ScottJim ShapiroDavid ShawKaty Sherrerd
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Fred SieselDeborah SoesbeeGeorge SofianosEric SorensenOlof Stenhammar
Rob TelsarArtie TolendiniJack TreynorWayne WagnerJeffery Wecker
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Genie WilliamsSteve WallmanSteve WunschSteve YoungrenDorit Zeevi
Four people particularly influenced the development of this book. Wayne Wagner thoroughlyreviewed an early draft of the manuscript. His suggestions greatly improved every part of thebook. Craig Holden used early drafts of the text in his trading course at Indiana University. I amespecially indebted to him for the confidence and vision he expressed to various publishers.Ananth Madhavan commented on early drafts of the book and supplied many bibliographicreferences. I have greatly appreciated having him as a colleague at USC. Finally, Jack Treynorwas instrumental in helping me appreciate the importance of the zero-sum game in trading. Mostprinciples of market microstructure somehow involve properties of zero-sum games.Several generous sponsors provided financial support for this project. I received “angelfinancing” from the New York Stock Exchange (Dick Grasso, Billy Johnston, Jim Cochrane, andGeorge Sofianos), the Jefferies Group (Frank Baxter), Mellon Capital Management Corporation(Bill Fouse and Tom Loeb), Bernard L. Madoff Investment Securities (Bernie and Peter Madoff),First Canada Securities International (Jim Medlock), Cantor Fitzgerald (Stuart Fraser and PhilGinsberg), and First Quadrant (Rob Arnott). Their early support allowed me to take time offfrom my teaching to start this project. I am also grateful to Oxford University Press whoprovided a developmental grant with which I was able to pay research assistants.I appreciate the support provided to me by the USC Marshall School of Business through theFred V. Keenan Chair in Finance. The generosity of our donors has been instrumental to theremarkable development of our faculty, School, and University over the last ten years under theleadership of Marshall School deans Jack Borsting and Randolph Westerfield and USC presidentSteven B. Sample. Our most important accomplishments appear in the largely unseen influencesthat we have upon our students, and upon the policymakers and business executives who relyupon our research when making significant decisions. Our work rarely provides us with suitableopportunities to thank everyone who makes it possible. I am grateful for this opportunity tothank our donors for their confidence, vision, and support. I am especially pleased to recognizeFred Keenan, whose loyalty and generous support to the University have been an inspiration tous all.Many people at USC helped me with the preparation of the manuscript. I am grateful both fortheir contributions to this book and for teaching me to write better. I gratefully thank myresearch assistants, Namrata Aggarwal, Chris Bandouveris, Claire Yu Cui, Shane Enete, CynthiaLee, Jeff Lin, Jennifer Ly, Anna Nguyen, Venky Panchapagesan, and Jia Ye; and mydepartmental assistants Deborah Jacobs, Marilyn Johnson, Terry Lichvar, and Helen Pitts. I amparticularly pleased to recognize Cynthia Lee for her very extensive assistance with grammar,style, and proofreading.Several people were notably helpful with proofreading early drafts. I thank Jennifer Chang,Abby Harris, Naftali Harris, Hai Lu, and Joey Engelberg for the careful attention that they paidto the manuscript.
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My family and friends also contributed to the successful completion of this book in more waysthat would be appropriate to list here. I particularly appreciate the support given to me by AlexBaskin, Jack Birns, Brian Greene, Bernard Harris, Devera Harris, Sam Jason, and Alissa Rimon.My wife and children were especially supportive. Without their support, I would not haveattempted or completed this project.My editors at Oxford University Press, Paul Donnelly and <<copy editor>> …Finally, I am indebted to the many students at USC who studied with me in my Trading andExchanges course. Their interest in trading encouraged me to first offer the course in 1991. Thisbook grew out the lectures that developed to present the course to them. The lessons that Ilearned from my students while teaching Trading and Exchanges greatly influenced theorganization and presentation of the topics that appear in this book. I believe that I have learnedmore from my students than from anyone else.I have inevitably failed to acknowledge many people who richly deserve it. Regrettably, theability to easily remember names is not one of the many gifts that I enjoy. Please forgive me formy oversight.Thank you to everyone who has helped make this project successful.
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Table of Contents1
Introduction
2
Trading Stories
Part I
The Structure of Trading
3
The Trading Industry
4
Orders and Order Properties
5
Market Structures
6
Order-driven Markets
7
Brokers
Part II
The Benefits of Trade
8
Why People Trade
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Good Markets
Part III
Speculators
10
Informed Traders and Market Efficiency
11
Order Anticipators
12
Bluffers and Market Manipulation
Part IV
Liquidity Suppliers
13
Dealers
14
Bid/Ask Spreads
15
Block Traders
16
Value Traders
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Arbitrageurs
18
Buy Side Traders
Part V
Origins of Liquidity and Volatility
19
Liquidity
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Volatility
Part VI
Evaluation and Prediction
21
Liquidity and Transaction Cost Measurement
22
Performance Evaluation and Prediction
Part VII23
Market StructuresIndex and Portfolio Markets
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24
Specialists
25
Internalization, Preferencing, and Crossing
26
Competition within and among Markets
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Floor versus Automated Trading Systems
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Bubbles, Crashes, and Circuit Breakers
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Insider Trading
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Bibliography
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Chapter 1IntroductionMarkets are fascinating. They change constantly as prices adjust to new information, as winningtraders replace losing traders, and as new technologies evolve.Highly skilled professional traders employ clever strategies in their search for trading profits.They ultimately profit from investors, gamblers, and foolish traders.The stakes in some markets are very high. Traders may arrange multimillion-dollar trades inseconds. They sometimes make or lose fortunes overnight.The prices that traders negotiate ultimately determine how market-based economies allocate theirscarce resources. Free economies owe much of their wealth to their well functioning markets.1.1 Scope of the BookThis book is about trading, the people who trade securities and contracts, the marketplaces wherethey trade, and the rules that govern trading. You will learn about investors, brokers, dealers,arbitrageurs, retail traders, day traders, rogue traders, and gamblers; exchanges, boards of trade,dealer networks, ECNs (electronic communications networks), crossing markets, and pinksheets; single price auctions, open outcry auctions, and brokered markets; limit orders, marketorders, and stop orders; program trades, block trades, and short trades; price priority, timeprecedence, public order precedence, and display precedence; insider trading, scalping, andbluffing; and investing, speculating, and gambling. This book will teach you the origins ofliquidity, transaction costs, volatility, informative prices, and trader profits.This book is not about the securities and contracts that people trade. We will not consider howto value them, who should trade them, how to design them, or how to issue them. Books aboutinvestments and corporate finance examine these questions.Market microstructure is the branch of financial economics that investigates trading and theorganization of markets. This field of study has substantially grown in size and importance sincethe October 1987 stock market crash.This book presents the economics of market microstructure in simple English prose. Althoughsome simple mathematics and graphics appear in a few supplementary examples, I fully explainall essential concepts in the main text.1.2 ObjectivesThis book will help you understand how markets work, and how governments and exchangesregulate them. You will learn how prices come to reflect information about fundamental values,who makes markets liquid, and why some traders consistently profit from trading while otherslose. You will be able to predict how various trading rules affect price efficiency, liquidity, andtrading profits. Finally, you will understand the forces that govern regulatory processes.With this knowledge, you can improve your trading strategies, and you can better manage thebrokers who work for you. If you are—or aspire to be—a regulator or an exchange official, thisknowledge will help you design better markets.
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The primary objectives of this book are to understand the origins of the following characteristicsof market quality:•
Liquidity. Traders and regulators often talk about liquidity, but they are rarely careful aboutwhat they mean. This book explains what liquidity is, and where it comes from. If youintend to offer or take liquidity, you must understand liquidity.
•
Transaction costs. Traders must effectively manage their transaction costs to tradesuccessfully. This book explains how to measure and manage transaction costs. If you tradeactively, you must understand transaction costs.
•
Informative prices. Speculators must understand how and when prices become informativeto trade successfully. Informative prices are essential to the wealth of our economy. Thisbook explains the processes by which prices become informative. If you intend to speculate,you must understand price efficiency.
•
Volatility. Traders care about volatility because it can have a significant impact on theirwealth. This book explains how prices become volatile, and how regulators try to controlvolatility. If risk scares you, you must understand volatility.
•
Trading profits. Trading is a zero-sum game in which some traders win and others lose.Traders who do not expect to win should refrain from trading. This book explains why sometraders consistently win while other traders consistently lose. If trading profits interest you—whether you manage your trading yourself or have someone manage it for you—you mustunderstand what determines trading profits.
The secondary objective of this book is to understand how market structure—trading rules andinformation systems—affect each of these five market characteristics.1.3 Instruments and MarketsMarket microstructure examines organized trading in instruments. Instruments include commonstocks, preferred stocks, bonds, convertible bonds, warrants, options, futures contracts, forwardcontracts, foreign exchange contracts, swaps, reinsurance contracts, commodities, pollutioncredits, water rights, and even many betting contracts. Most ideas discussed in this book applyequally well to trading in all these instruments.Legislatures and judges have created numerous legal definitions of the term “security.” Thesedefinitions often distinguish between instruments that represent ownership of assets like stocksand bonds (usually called securities) and instruments that derive their values from commoditiesor from other security values (derivative contracts). They also universally exclude bettingcontracts. We will pay attention to these distinctions only when they affect the markets throughthe regulatory process.A market is the place where traders gather to trade instruments. That place may be a physicaltrading floor, or it may be an electronic system in which traders can easily communicate witheach other. The New York Stock Exchange, the Chicago Mercantile Exchange, and theEuroNext Amsterdam Options Exchange are examples of markets where traders meet on tradingfloors. Nasdaq, the Euronext, the Hong Kong Futures Exchange, and the interbank foreignexchange market are examples of electronically linked markets. This book considers howtrading markets are organized, and how their rules affect traders.
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1.4 A Brief Overview of Trading and ExchangesThis section provides a brief overview of some main points introduced in this book. It providesyou with an outline of what you can expect to learn from this book. Do not be alarmed if you donot understand it all now. The remainder of the book explains everything in detail.Trading is a search problem. Buyers must find sellers, and sellers must find buyers. Everytrader wants to trade at a good price. Sellers seek buyers willing to pay high prices. Buyers seeksellers willing to sell at low prices. Traders also must find traders who are willing to trade thequantities, or sizes, they desire. Traders who want to trade large quantities may have to findmany willing traders to complete their trades.Dealers and brokers help people trade. Dealers trade with their clients when their clients want totrade. The prices at which a dealer will buy and sell are the dealers’ bid and ask prices. Afterthey trade with their clients, dealers then try to trade out at a profit by selling what they havebought or by buying back what they have sold. In effect, clients pay dealers to take their tradingproblems. The dealers then try to solve them at a profit. Dealers profit by buying low andselling high. Successful dealers must be excellent traders.Brokers are agents that arrange trades for their clients. They help their clients find traders whoare willing to trade with them. They profit by charging commissions.Patient traders obtain better prices than impatient traders do because they are willing to searchlonger and harder to arrange their trades at favorable terms. Impatient traders pay for theprivilege of trading when they want to trade.Traders who offer to trade give other people options to trade. These options sometimes are quitevaluable. Traders who expose their offers can lose to clever traders who use various frontrunning trading strategies to extract these option values. Traders therefore must expose theiroffers very carefully. They should expose only to traders who are most likely to trade with them.Traders who trade only to accommodate other traders risk trading with, and losing to, wellinformed speculators. Speculators are traders who trade to profit from information they haveabout future prices. Well-informed speculators can predict futures prices better than other traderscan. They then choose to buy or sell based upon which side they expect will be profitable.Dealers lose to well-informed speculators because they end up being on the wrong side of thetrade. Prices tend to move against their positions before they can trade out of them. All traderstry to avoid trading with well-informed speculators.Dealers recover their losses to informed speculators by widening the spread between the bid andask prices at which they will buy and sell. Uninformed traders therefore pay more for theirtrades when dealers lose a lot to informed traders. In effect, uninformed traders lose to wellinformed traders through the intermediation of dealers.Traders who can estimate fundamental values cause prices to reflect their value estimates. Theybuy when price is below their value estimates and sell when price is above. Their buying pushesprices up, and their selling pulls prices down. They do not trade if they believe that prices reflectvalues. Well-informed traders make prices informative.Bluffers can sometimes fool uninformed traders into trading unwisely. In general, they canprofit if the price impacts of their buying and selling are not exactly opposite to each other.
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Since dealers may trade when bluffers want them to trade, dealers must be highly disciplined toavoid losing to bluffers.Trading is a zero-sum game when gains and losses are measured relative to the market average.In a zero-sum game, someone can win only if somebody else loses. On average, well-informedspeculators and bluffers win, and poorly informed traders and foolish traders lose. Informedtraders can only profit to the extent that less informed traders are willing to lose to them.Poorly informed traders trade for many reasons. Investors use the markets to move money fromthe present to the future. Borrowers do the opposite. Hedgers trade to manage financial risksthey face. Asset exchangers trade one asset for another they value more. Gamblers trade toentertain themselves.Exchanges and brokerages design markets to minimize the search costs of trading. They usuallyorganize markets so that everyone who wants to trade gathers at the same place. A commongathering place helps traders find those traders who will offer the best prices.Exchanges and brokerages once exclusively organized their markets on physical trading floors.Now they can organize their markets within computerized communications networks that allowbuyers and sellers to arrange their trades remotely. Electronic marketplaces have rapidlyexpanded as the costs of electronic communications technologies have dropped.Most traders want to trade in well-established markets because other traders trade there. Whenmany traders trade in the same place, arranging trades is very easy. The attraction of traders toother traders makes it hard to start new markets.Entrepreneurs create new markets when old markets do not adequately meet the needs of asignificant set of traders. Since traders face a diversity of trading problems, no single market canbest meet every trader’s needs. Many diverse markets may form as exchanges and brokeragescompete to attract traders.Arbitrageurs ensure that prices do not vary much across markets. When prices diverge, they buyin cheaper markets and sell in more expensive markets. The effect of their trading is to connectsellers in cheaper markets to buyers in more expensive markets.An exchange’s trading rules affect the quality of its markets. They determine the balance ofpower between informed traders and uninformed traders, between public traders and professionaltraders, and between large traders and small traders. Trading rules are very important.Markets work best when they trade fungible instruments. An instrument is fungible if one unit (ashare, a bond, a contract, …) of the instrument is economically indistinguishable from all otherunits. If so, buyers do not care which units they receive. Since all sellers offer identical units,buyers can buy from any seller who offers an attractive price. Sellers likewise can sell to anybuyer. Fungible instruments therefore are easier to trade than are instruments that haveidiosyncratic characteristics. In derivative markets, the benefits of fungible instruments causetrading to concentrate in just a few standardized contracts.1.5 Key Recurrent ThemesA number of important issues repeatedly appear throughout this book. This section identifiesthese issues. Watch for them as you read this book.
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Information asymmetries. Traders who know more about values and traders who know moreabout what other traders intend to do have a great advantage over those who do not. Wellinformed traders profit at the expense of less informed traders. Less informed traders thereforetry to avoid well-informed traders. Pay attention to who is well informed and to how traderslearn about values.Options. The option to trade is valuable. People who write limit orders give free tradingoptions to other traders. Clever traders can extract the value of these options. Pay attention towhen traders create trading options and to how they prevent other traders from extracting theirvalues.Externalities. People create positive externalities when they do something that benefits otherpeople without compensation. People create negative externalities when they do something thatharms other people without penalty. The most important externality in market microstructure isthe order flow externality. Traders who offer to trade give other traders valuable options to tradefor which they are not compensated. The order flow externality attracts and binds traders tomarkets because traders want to benefit from free trading options. Pay close attention to when,why, and how traders offer to trade. Pay attention also to how markets, brokerages, and dealersbenefit from the order flow externality.Market structure. Market structure consists of the trading rules, the physical layout, theinformation presentation systems, and the information communication systems of a market.Market structure determines what traders can do, and what they can know. It therefore affectstrader strategies, the power relationships among different types of traders, and ultimately traderprofitability. Always consider what effects market structures have on trading strategies and onthe balance of power between various types of traders.Competition with free entry and exit. Traders compete in markets to make profits. Tradingstrategies that generate large profits attract traders who want to participate in those profits. Theirentry lowers the profits that everyone makes, on average. Conversely, traders quit using tradingstrategies that are not profitable, which allows remaining traders to make more profits onaverage. Free entry and exit ensures that alternative trading strategies produce equal net profits,on average, after accounting for all costs. Wherever you see people competing, consider how thecosts of entry and exit affect their ability to maintain profits or avoid losses. This principle willhelp you understand the determinants of bid/ask spreads, dealer profits, informed trader profits,and order submission strategies.Communications and computing technologies. Markets are essentially information processingmechanisms. They process information about who wants to trade, how much, and at what prices.The resulting prices aggregate information about fundamental values. The growth in informationtechnologies has changed and will continue to change how people trade. Pay attention to the roleof information processing technologies in the markets.Price correlations. Markets for similar instruments are closely related. They tend to havesimilar market conditions, and they often compete fiercely with each other for order flow. Theorder flow externality generally ensures that one market among a set of closely related marketswill eventually dominate the others. Pay attention to markets that trade similar instruments andto the differences among them that make them unique. These issues affect how markets competewith each other.
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Principal-agent problems. Principal-agent problems arise when agents do what they want to dorather than what their principals want them to do. The most important principal-agent problemin market microstructure involves brokers and their clients. Brokers do not always do what youwant them to do, and they may not work as hard on your behalf as you would. Pay closeattention to how traders control their brokers.Trustworthiness and creditworthiness. People are trustworthy if they try to do what they saythey will do. People are creditworthy if they can do what they say they will do. Since peopleoften will not or cannot do what they promise, market institutions must be designed to effectivelyand inexpensively enforce contracts. Pay close attention to the mechanisms that ensure thattraders will settle their trades. Attempts to solve trustworthiness and creditworthiness problemsexplain much of the structure of market institutions.The zero-sum game. All trades involve two or more parties. The accounting gains made byone side must equal the accounting losses suffered by the other side. Understanding the originsof trading profits therefore requires that we understand both sides of a trade. We mustunderstand why traders on one side expect to profit, and why traders on other side either arewilling to lose or do not understand that they should expect to lose.1.6 Outline of the BookThe book is organized into seven parts. Part I examines the structure of trading. Severalchapters describe how markets are organized and regulated, and how traders trade in them.Although much of the information is descriptive, the text also analyzes how various marketstructures affect trading strategies.Part II considers what benefits markets produce for traders and for the wider economy. We mustaddress these questions to judge whether the markets are working well. The first of the twochapters in this part of the book considers why people trade. The other chapter explains howmarkets benefit the whole economy. This chapter concludes with my opinion about whatmarkets should do and for whom. Your opinion may differ from mine.To understand how trading rules affect traders, you must first understand how traders behave.The book therefore next devotes many chapters to understanding what various traders do. Thesechapters should be especially interesting to readers who want to become traders and to traderswho want to improve their trading skills. Part III includes chapters that consider variousspeculative trading strategies. Part IV examines the traders who offer liquidity.Part V contains two chapters that will help you to better understand the origins of liquidity andvolatility. Both concepts are described in relation to the various trading strategies introduced inParts III and IV.We consider the problems of evaluating trader performance in Part VI. You must understandthese issues if you intend to manage brokers, or if you want to know why index markets are sopopular. These chapters lay the foundation for understanding who profits, and who loses, fromtrading. If you intend to trade for profit or invest your money with a money manager, the chapteron performance evaluation and prediction will be of great interest to you.Finally, Part VII concludes with several chapters that consider the economics of various marketstructures. These chapters examine how markets are organized, how they compete with eachother, and how they respond to extreme volatility. These chapters will obviously interest©2002 Oxford University Press
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regulators and exchange officials. They should also interest farsighted traders: Being able topredict how changes in rules, technologies, and competitive relationships affects marketsdistinguishes winning traders from losers.Numerous text boxes appear throughout the book. These boxes contain examples, stories, andhistorical explanations that illustrate and illuminate points made in the text. They are useful asmnemonic devices for remembering jargon and concepts. I beg your indulgence for the puns,wordplays, lighthearted jabs,