Note to the SEC on Research for $$s: Keep it simple Bloomberg reports on the SEC “working on” resolving the conflict between the US policy on paid research and MiFID II. The US rules require that those who sell research be a registered investment adviser, and the European rules require that investment managers pay for … Continue reading Payment for Research Thoughts & Remembering August 2007
According to a Reuters article “IEX plans to nab listings from rivals with cheaper, simpler fees.” The article describes the fledgling exchange’s approach and the reasoning behind their listings push by quoting IEX’s head of listings, Sara Furber. She described the approach to price competition as “simpler, cheaper fees” and the reasoning for the exchange … Continue reading IEX Brings Price Competition and Hype to a Regulatory Function
More Marketing Gibberish in the Active vs Passive Debate The Wall Street Journal reported that the “World’s Biggest Pension Fund Wants to Stop Index Trackers Eating the Economy.” The article repeats nonsense such as this quote from an Alliance Bernstein analyst: “passive investing is worse than Marxism.” It cites numerous professionals discussing the inefficiency of … Continue reading Thoughts on the Active vs Passive Debate & AQR “Ups the Ante”
Last week the Investors Exchange unveiled its latest proposal to improve its market quality, to use their “Crumbling Quote” (CQ) algorithm to determine the access fee that they will charge to “takers” of displayed liquidity on their exchange. Unfortunately, due to their continued destructive and inflammatory denouncement of providing incentives (rebates) to liquidity providers, I … Continue reading IEX’s CQ Fee Proposal: Can a Strategy of Punishment Without Incentives Work?
The current U.S. equity market provides American companies a competitive advantage due to the liquidity that trades on our markets every day. In fact, the average stock trades more than double the percentage of its market cap in America, than the other G7 markets. This is a boon to American companies, translating directly into an … Continue reading Rhetoric of Massachusetts Inquiry Risks Dangerous Politicization of Rebates
The Wall Street Journal reports that two Congressmen (Sean Duffy of Tick Pilot fame and NY Representative Meeks have reiterated the arguments made by the NYSE, in a letter that calls for the SEC to reject the Bats Market on Close proposal. This is truly sad. One of the first principles of good regulation is … Continue reading Why Can’t Congressmen Stick to Doing Nothing?
Are Cryptocurrencies Experiencing “Deja vu All Over Again” Goldman Sachs has joined the chorus of those declaring that the market for Bitcoin, Ethereum and other cryptocurrencies as “too important to ignore.” The article does not present a comprehensive analysis of the burgeoning asset class but does provide some tidbits about the Bitcoin, Ether, and the … Continue reading Is History Repeating With Crypto Currencies? & Exchanges are Regulators
European Fragmentation = “Back to the Future” There have been a series of articles on the likely Fragmentation of the European equities market such as coverage from Markets Media and TabbForum which explain that 20 or so new Systematic Internalizer (SI) venues will be providing liquidity in 2018. These venues will be able to quote … Continue reading European Fragmentation = Back to the Future & Thoughts on Automated Testing
Congratulations IEX, Now Comes the Hard Part As the FT reported, IEX’s auction processes were approved, so they are on-track to commence listings in October. That means that we will all start to learn if moral suasion, rhetoric about their “lynchpin” speedbump, and popular appeal will translate into deep liquidity books and trustworthy auction prices … Continue reading Congratulations to IEX & Thoughts on the Evolution of Cryptocurrency Markets
Central Risk Books (CRBs) Are Coming of Age An article in Financial News goes into some depth examining CRBs, which is a favorite topic of mine since I built the first version of a CRB at Salomon Smith Barney over 15 years ago. This article, which delves deeply into the trader view of CRBs, makes … Continue reading Thoughts on Central Risk Books & Market Access Rules