Heya Peeps, I'm working on an innovation: the Decentralized Stock Exchange (DSX). http://www.decentralizedstockexchange.com/ The concept is to remove the need for a central exchange, and push the market state out to the devices. Think of the network of computers, browsers, mobile devices, tablets, etc. as one big cloud. There, the state of the market is kept. Whenever a trade is made, holdings of shares are synced across this cloud of devices. If you have an idea and need funding, you can offer shares and do your own IPO, and post them on the exchange. Who needs Goldman, JPM, MS, or another to underwrite you, when the DSX is immediately available? Honestly, the stagnation of tech IPOs is evidence of how the current system stifles innovation. There were ZERO tech IPOs in the first quarter of this year. That's embarrassing! After shares are issued, they are traded peer-to-peer. Via an algorithm similar to building a routing table, buyers and sellers are matched, and shares are exchanged directly between them. Another key point is that market and deep book data are always free. One of my greatest annoyances in this field is how data are so highly paywalled, and it's a huge advantage for those inside. On the DSX, the standing orders are out there for everyone to see. Real-time and historical data a free, and can be collected by anyone. A quick note about security. Let's say that an enterprising hacker decides to jailbreak their iPhone and give themselves some shares. Sorry buddy, that's not going to work. It's going to be immediately flagged as a discrepancy by their neighbors, reconciled, and adjusted back to it's proper value. A glance at the Web site will tell you that it's very early in the process, but I thought that I'd post it out here for feedback. Let me know what you think, and don't worry about hurting my feelings. If you're a programmer, and would like to help, PM me. I plan to use Angular 1.0, Objective-C, Java, C++, and MySQL. It's a unique opportunity: when will you again have the chance to actually build a stock exchange? This I promise: you will learn about market structure!!! Sincerely, Keith :^)
I had this idea long ago. Then it was not viable. Today with the acceptance of the blockchain, it is very possible.
Sorry to drop a turd in your punch bowl but consider this: Regulatory bodies like the SEC aren't going to support such a thing. To actually buy and sell *actual* shares in the decentralized market you'd have to go to the usual centralized markets like NYSE to get them The closest analog to what you're proposing is "dark pools" and even those are regulated.
Hey, Levine got Island through. I'm sure that he faced similar roadblocks. This is just the next generation. The train is comin', man! Funny you mention "dark pools." I think of this as a "light pool"? "Lighted pool?" "Bright pool?" "Clear pool?" "Chlorinated pool?" You get the point. The financial industry hasn't REALLY been disrupted yet--not like Amazon disrupted retail, or Napster disrupted the music industry. The DSX has the potential to shake things up in that way.
One of the biggest issues with the U.S stock markets is that their decentralized. That's how Predatory HFT ( front running) and payment for order flow came around. It did bring cost down but their is no true level 2 book in the U.S stock markets. It's scattered all over the place. Then it created all these direct exchange fees that are ridiculously expensive for any modest retail to even consider. I think they should be centralized like the CME.
It's actually the future of the stock market, the world is switching to the open-source, even currencies like Bitcoin are starting to penetrate into a daily life and destabilize the governments, so why not? I am not a geek, but I think you're definitely moving in the right direction, good luck!
The problem is the entry and exit points into and out of the blockchain. Bitcoin is a perfect example. If you own BTC and want to buy USD with it you have to go through a registered, regulated broker. Same with the other direction. The regulated brokers have all the same "know your customer" anti-money laundering hoops to jump through. (Yes, I know there are other, more circuitous ways of exchanging BTC for fiat currencies.) How can you implement things like limit up/down to protect market participants? How can you halt trading in stocks that are tanking? The list of problems with this golden vision go on and on.