“Over the past decade, the stock exchange business has undergone a radical transformation.  What was once a nonprofit, quasi-utility, member-owned duopoly has turned into a for-profit, fragmented, and extremely competitive business with 13 exchanges…Normally, if a business model opened itself to competition, this would be viewed as a good thing.  It would enable free markets to work. However, the stock exchange business has more responsibilities than profit.  It has to facilitate capital formation for companies and to protect individual investors. Unfortunately, the new for-profit landscape has caused the exchanges to forego these responsibilities in order to focus on the (more…)

  After two years, the tick size pilot will end after the close of trading today. While the goal of the tick pilot (increased small cap liquidity) was noble, the preliminary results appear to show that the goals were not accomplished.  However, before the industry declares the pilot a waste of time and money (some have estimated it cost hundreds of millions of dollars), it’s important to realize that the pilot has yielded two years of data which can now be analyzed by researchers.  We hope that the analysis not only shows what worked and what didn’t work but also gives reasons for certain failures.  (more…)

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