Thursday, June 4, 2015

The Old New Market Structure

Seems like a good plan to me.
The article has a creative solution to the equity market structure problem of fragmentation: only allow stocks to trade on one exchange but have multiple exchanges compete for listings. The authors propose:

“The remedy is to create multiple trading venues and then limit trading in a particular security to one of them. There could be 10 licensed stock exchanges, and they could split among them the approximately 8,000 companies whose shares trade publicly in the U.S.”
As opposed to now, when we have companies all under essentially identical exchanges due to, I think, the consolidation of regulation under FINRA, and the exchanges compete to get the most volume.