The best known (at least in the tech circles - in good part thanks to HN and Matt Levine) is probably IEX. The exchange guarantees that every participant is behind the exact same time delay. And they do that by having a sufficiently long spool of optic fibre between the exchange "broadcast switch" and the market maker computers.
Simple and effective. Relies only on laws of physics to create the delay.
There are also exchanges that run with "frequent batch auction" principles.[0]
Run continuously, non-delayed, but only sweep the order book at a random time every [1,2) seconds. Run for something like our current extended market hours.
Everyone gets the benefit of fast-enough execution and strong liquidity.
Crazy high-frequency gamesmanship goes away. Smart quantitative plays are still possible.
Even once per second seems like overkill. That interval would still largely just facilitate the weaponization of exceedingly low information latency.
30 seconds seems reasonable, 1 minute better, and 5 minutes still better. In all honesty even going as long as 30 minutes should still facilitate all legitimate purposes.
Honestly what would happen if the stock market didn't exist. It seems like these days the price of stock is so disconnected from lived reality that genuinely confused if it would be all that catastrophic
Well we’d go back to an era where private capital owns the world. The public would not be able to participate or benefit from the ownership of companies and share in the prosperity.
It's not disconnected from reality. You just don't understand it.
If the stock market didn't exist you would have less opportunities to invest in well priced companies and people would be manipulated in investing in opaque, often ridden with accounting shenanigans things like private equity.
The more companies are public and subject to price discovery done by sophisticated players the better it is for uninformed players like normal investors but also less sophisticated informed players like pension funds.
I saw this as a serious proposal somewhere but I can't remember where.
There are exchanges out there that run continuously but with delayed information feeds.
The best known (at least in the tech circles - in good part thanks to HN and Matt Levine) is probably IEX. The exchange guarantees that every participant is behind the exact same time delay. And they do that by having a sufficiently long spool of optic fibre between the exchange "broadcast switch" and the market maker computers.
Simple and effective. Relies only on laws of physics to create the delay.
There are also exchanges that run with "frequent batch auction" principles.[0]
0: https://econpapers.repec.org/article/oupqjecon/v_3a130_3ay_3...
Run continuously, non-delayed, but only sweep the order book at a random time every [1,2) seconds. Run for something like our current extended market hours.
Everyone gets the benefit of fast-enough execution and strong liquidity.
Crazy high-frequency gamesmanship goes away. Smart quantitative plays are still possible.
It feels like something Matt Levine would have talked about.
He has
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one per week should do it.
I'd settle for once per second. There's a lot of very fast trading nonsense which I've only heard defended with the "liquidity" bogeyman.
A sealed-bid uniform-price batch auction seems like the right action.
Even once per second seems like overkill. That interval would still largely just facilitate the weaponization of exceedingly low information latency.
30 seconds seems reasonable, 1 minute better, and 5 minutes still better. In all honesty even going as long as 30 minutes should still facilitate all legitimate purposes.
It's your God-given right as an American to get millisecond level price discovery. Trading delays sounds like Communist bureaucracy.
Honestly what would happen if the stock market didn't exist. It seems like these days the price of stock is so disconnected from lived reality that genuinely confused if it would be all that catastrophic
Well we’d go back to an era where private capital owns the world. The public would not be able to participate or benefit from the ownership of companies and share in the prosperity.
8 replies →
I hypothesize all dividends, no share value. How would that world look
2 replies →
It's not disconnected from reality. You just don't understand it.
If the stock market didn't exist you would have less opportunities to invest in well priced companies and people would be manipulated in investing in opaque, often ridden with accounting shenanigans things like private equity.
The more companies are public and subject to price discovery done by sophisticated players the better it is for uninformed players like normal investors but also less sophisticated informed players like pension funds.
2 replies →