The Fourth Exchange

“Nothing vast enters the life of mortals without a curse.” – Sophocles With a geyser of attention-snatching news as our normal daily backdrop, one could easily be forgiven for missing a signal from a collection of recent market structure clues. Individually, most of these have been on the radar of those that follow capital markets closely. And then there are others that are much deeper down in the weeds. Taken together, however, they paint of picture of increasing levels of market complexity coupled with increasing dependencies on fewer dominant players. Here’s the evidence: By now, most of you know that the launch of Long-Term Stock Exchange (LTSE), the launch of Members Exchange (MEMX), and the launch of MIAX Pearl equities exchange – all of which going live this month – bring the total number of US equities exchanges to 16. Now, considering that 33 alternative trading systems (ATSs) and at least another 12 internalizing broker-dealers (including wholesale market makers, single dealer platforms (SDPs) and central risk books) executed trades in NMS (national market system) stocks in 2019, US equity market fragmentation continues to [...]

By |2020-10-02T16:22:22-04:00September 29th, 2020|For Subscribers|

Trick Shot: Robinhood Underwrites MEMX

“Principles for the Development of a Complete Mind: Study the science of art. Study the art of science. Develop your senses - especially learn how to see. Realize that everything connects to everything else.” - Leonardo da Vinci   If there ever was a time to see how things are connected to other things, it is now. This is particularly true in places where something that is "free" is interpreted to be "without cost." After all, like "free" drinks at the casino, human nature tends to regress to its most lizard-like tendencies when presented with a frictionless environment... When will we ever learn that "free" is never the best price? Anyway, without becoming distracted by a rant about the true cost of Facebook, et al, let's take a brief look at the impact of "commission-free" trading on the macrostructure of the US market ecosystem over a very short window since October 2019: Thanks, in large part, to the popularity of retail broker, Robinhood Financial, LLC ("Robinhood) - the upstart financial [...]

By |2020-10-14T21:47:06-04:00June 18th, 2020|For Subscribers|