Typically, when an industry is characterized by robust competition, friction costs for consumers are low. For example, it’s hard to “extract rents” from consumers for an average car when there are twelve automakers making similar vehicles; consumers have choice, and vote with their dollars. This is why one part of our industry is quite curious – stock exchanges. We have twelve of them, including upstart IEX. One would think that having twelve stock exchanges would keep costs down for investors, but this is not the case. You might recall an article written by Larry Tabb a year ago, where he (more…)

  We have found numerous instances over the past few years where information is leaked from exchange proprietary data feeds.  For example, we recently highlighted how Nasdaq data feeds were leaking information when post-only orders interacted with hidden orders.  Also, a few years back we wrote a paper titled “Data Theft on Wall Street” which revealed that some exchanges were displaying an indicator in their data feed that identified hidden orders.  While the speed of data feeds is often debated, there is not much talk about the enriched content that these feeds provide and how this could be hurting traditional investors.  Is this enhanced content really (more…)