My afternoon train reading:

• Stop sabotaging your investments (MarketWatch) see also Ignore the Market, Watch the Data (Bloomberg View)
• Stiglitz: How Much Trading Should There Be? (Bloomberg View)
• Jeff Kleintop Sees Good Earnings Growth Ahead (Barron’s) see also Economic recovery accelerates as winter turns to spring (The Term Sheet)
• Too Big to Jail (Newsweek)
• Offshore Tax Havens Cost You $1,259 a Year (Fiscal Times)
• Tesla vs. the Auto Dealers (New Yorker)
• Stockbrokers who repeatedly failed a qualifying exam have worse disciplinary records (WSJ)
• Why nobody can tell whether the world’s biggest quantum computer is a quantum computer (Quartz) see also Gravitational waves show deficit in black hole collisions (Ars Technica)
LOL: A Statistical Analysis of the Work of Bob Ross (FiveThirtyEight)
• This Is What the GOP’s War On Science Looks Like (io9)

How was your day?


Regulators Weigh Curbs on Trading Fees

Source: WSJ

Category: Financial Press

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

3 Responses to “10 Wednesday PM Reads”

  1. Lyle says:

    Of course we could go back to the good old days when all brokers belonged to a price fixing cartel, membership of which meant you did not discount. Further we could bring back the odd lot charges. I doubt few would favor this, all be it brokers would be able to buy bigger yachts. Further go back to human specialists as well. Compared to 40 years ago things are far more efficient. Start with prices in cents rather than in pieces of 8 (12.5 cent price steps). Of course at the time some said going to cents based pricing was going to be the end of the world. It did reduce the spread that brokerages skim off. Much of things like the chart are really due to pricing being by cents now which reduces the spreads for the market makers to make money. It would be interesting to find an analysis of how specialists made their money 40 or so years ago and compare it with the new specialists (market makers – HFT) Include how much the margin per share was.

  2. winstongator says:

    The first link failed to state a huge penalty of jumping mutual funds – loads. If you’re taking a 6% sales load when you get in, and move every year, that will eat nearly all your returns. I guess people may jump index-type ETFs with limited transaction costs, but there is still a ton of money in loaded funds.

    The easiest way to combat HFT is the transaction tax. We have it for everything else, and it could be priced to have minimal impact on long-term investors. It would be nowhere close to the 6% tax mutual fund investors willingly accept. There is a simple basis for this: US markets exist because of how our government makes and applies property rights laws. Traders are free to take their activities to the Moscow stock exchange and learn what real property protections we have here.

  3. constantnormal says:

    I suspect it is likely that the fee paid to the “market maker” trader (HFT or otherwise) is to compensate them for standing their ground and “maintaining an orderly market” during market panics (in both directions) … but those days are gone, with HFT being free to walk/run away from the markets during crashes, yanking away large fractions of liquidity, as well as playing the markets to accentuate irrationality during periods of irrational enthusiasm … NOBODY who is deemed a “market maker” should be allowed to cut & run during a panic, not so long as they are being lavishly rewarded as illustrated above.

    Of course, the SEC will have to “study” this for a few years before deciding that times have changed and another study is warranted …