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Under the headline, "The Wolf Hunters of Wall Street", The New York Times Magazine is running this review of a new book. It tells a long story that ends in the creation of IEX (Investors Exchange), a new stock exchange with the intent of bypassing the unfair advantages that co-located high-speed traders currently have. After a few weeks of operation near the end of 2013, their volume was larger than AMEX(!!)
Here's a quote from near the end of the book review:
IEX had made its point: That to function properly, a financial market didn't need to be rigged in someone's favor. It didn't need payment for order flow and co-location and all sorts of unfair advantages possessed by a small handful of traders. All it needed was for investors to take responsibility for understanding it, and then to seize its controls.
"The backbone of the market," Brad Katsuyama (President & Chief Executive Officer, IEX) says, "is investors coming together to trade." While the article is long, I enjoyed the story. I have no connection to this company, but here's their website.
(Score: 4, Interesting) by internetguy on Tuesday April 01 2014, @11:10PM
IEX is a FINRA registered "alternative trading system" (ATS) and is regulated by the SEC. While IEX appears to have it's heart in the right place, IEX is not a National Exchange. IEX is still operating in the same market place as high frequency traders (HFT), millisecond transactions, dark pools, and automatic trade algorithms. I believe these problems are perpetuated by FINRA. We need another Financial Regulatory Organization who has regulations we can TRUST. I propose that we need to create another regulatory organization to oppose FINRA and create some competition and trust into the exchanges.
Sig: I must be new here.
(Score: 3, Funny) by edIII on Tuesday April 01 2014, @11:23PM
My kingdom for mod points...
(Score: 2) by c0lo on Wednesday April 02 2014, @12:50AM
Not interested. A cheap republic on the other hand... if you have one, I might throw in some mod points for that.
(grin)
(Score: 1) by khallow on Wednesday April 02 2014, @10:01AM
While I approve of creating rival financial regulatory organizations, this would remain a problem because there really is only one space. Even the "national exchanges" are in this space even if they are subject to different regulation and rules. Nor would there be any advantage to attempting to segregate these markets, participants, and activities/algorithms. Especially since it doesn't deal with the government regional monopolies on regulation. There's no competitor to the SEC in the US.
Instead, I think the diversification of markets into dark pools is one of the better financial innovations out there. I'm sure it'll bite us every so often, but dark pools are still a decent workaround for a few of the regulations imposed by the SEC and restrictions imposed by the national exchanges (such as time of day or week restrictions on trading stock or restrictions on computer trading at the very times when that trading is most needed - such as during market crashes).
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