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The SEC just approved the 17th US stock exchange, the Boston Security Token Exchange, which will be known as BSTX. You might be thinking: “We don’t need another stock exchange. It’s just more fragmented liquidity, more maker/taker pricing and more order type games.” That was our first thought but we decided to reserve judgement and read the SEC approval notice and also reach out directly to the BSTX and ask them to help us understand why we need a 17th stock exchange. Here are some interesting facts about the new exchange that we learned from the SEC approval notice and the BSTX press
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A new academic paper, which supports payment for order flow (PFOF), has been making the rounds through the market structure circle. The paper is titled “Commission Savings and Execution Quality for Retail Trades” and was written by two MIT professors and a University of Texas professor. The first thing we always do before even reading an academic paper is to check to see if the paper was sponsored and if there is a financial arrangement between the authors and the sponsor. This paper fails that test miserably as demonstrated by footnote #1: “Disclosure: Some of the data for this paper
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