“Liquidity Is The Last Refuge Of The Scoundrel”

15

February, 2012

 

Liquidity could be one most overused and misunderstood terms on Wall Street. Liquidity is a term that is usually rolled out when self-interested parties are looking to defend their highly profitable business models. How many times have you heard the HFT industry say “we provide liquidity”? We are also seeing a lot of “liquidity” comments from the big banks who are trying to squash the Volcker rule. The banks are warning that if you force them to shed their proprietary trading areas then the market will suffer because of a “lack of liquidity”. But the question becomes, how much liquidity is actually

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