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The result of these efforts by the regulators will be that the individual will have a better chance competing against the professional in the markets. |
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Do you know what the NYSE, Nasdaq, and all of these ECNs really want? They want to survive in the coming restructuring of the world trading markets. |
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Restructuring of the world trading markets? You bet! Soon there will be a single, central, global, limit order book against which all orders will be matched and executed. |
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Because the ''middleman" is becoming obsolete, the specialists and the market markers are especially threatened. Their spreads are shrinking, reducing their ability to make money in their business. Electronic "matching" networks can pair bids and offers to execute trades without their intervention. They just don't fit into this new world. |
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Here's a real-world example: In 1996 the German stock exchange added an electronic trading system to run alongside its traditional "open outcry" trading floor. Within two years, 90 percent of all trades were being done electronically. |
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A lot of this move started with the ECNs. They destroyed the old order. They set out to render the exchanges, specialists, and market makers obsolete; and they have done quite a good job of it. It has been reported that the NYSE averages 22 seconds to make a trade. The Island ECN can do it in a fraction of a second. These executioners use just a few workhorse servers, avoiding the overhead of a group of frenetic, highly-paid professional traders. |
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For all of these executioners, this is a frightening period. Who will lead these changes? Who will control this enormously powerful new system? Who will have a job tomorrow? Each executioner is exploring financial restructuring to raise capital. Each is engaged in megamerger discussions to increase its respective clout. |
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The only certainty at this time is that youthe Sixth Market traderwill think you have grabbed the golden ring. You will see improved information flows, reduced transaction costs, more and more liquidity, better and better price execution, smaller and smaller spreads, more robust 24-hour worldwide trading, and a wide array of customer service improvements. |
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