Putnam has the right model...like any other business...the cost of a purely electronic order combined with the fairness of time and price priority...allows everyone to become more and more just another trader...looking at the same data everyone else looks at and executing their orders on the same platform is where we are going...flaws of order entry will be mostly because of hardware and internet path reasons... For the government agencies to elect or approve of a path that is less fair than this model is not likely... To say that market makers provide a buffer for the market is rubbish...They will have to play the game like everyone else... Furthermore this sets the stage for the premise of all markets to converge and consolidate into a more singular 24 hour data pricing line... Way to go Putnam...for having the proper vision...and the ability to move the markets forward... The other implication is for electronic brokerage to become more and more a more uniform market...whereby the non-marketers will win on providing the least cost brokerages...Cost will be higher in the hand holding firms...Good advise or methods which are very difficult to come by will command the premiums...
It has gone a little deeper than the BW article suggests. Nasdaq is composed of mainly technology issues, recently shifting its focus slightly into financial services. I've recently done some looking at the S & P sectors, where financial service companies now have the greatest weighting. I just finished reading this: http://www.financialsense.com/editorials/daily/2003/0808a.htm Maybe, I'm just trying to say to 'keep your ear to the ground'. Bruce
Putnam in Forbes interview http://www.forbes.com/2003/08/07/0807chat_transcript.html?partner=yahoo&referrer=
good article, thx for posting the link .. with the retail trading volume up (?) lately, that may provide some lift for the nas' valuation..
The SEC values price-time priority because it rewards the most aggressive buyers and sellers and produces fairer prices. It also ensures that market insiders don't ignore retail investors. The SEC has never approved an exchange that did not force orders to interact -- and officials say it's not likely to do so soon. But NASDAQ's market-makers count on these highly profitable in-house trades, on which they collect commissions from both the buyer and seller plus the spread between the buy and sell prices. "If NASDAQ implements price-time priority," says Larry Leibowitz, head of equities for Schwab's trading unit, "the whole market-maker model comes into question -- and all bets are off." Dealers are vital to NASDAQ because they keep trades flowing -- by posting quotes, maintaining an inventory in the stocks they handle, and putting up their own capital as buyer of last resort in disorderly markets. A market that depended solely on ECNs, which don't have such obligations, could break down under stress. This is a quote from the article and this is why I trade Futures. Michael B.