May Day May Day I'm not sure if you noticed there "O" Butler....but the commission component of transaction cost these days is a race to Z-E-R-O. Perhaps you would prefer the time before 1 May 1975 (the date which the $2 brokers still call May Day), at which point all commissions were fixed...by Congressional/SEC order. People have demanded a change in commission structure. And they did it 30 years ago. Is this what you mean? Otherwise I find myself searching for the point of your thread. BTW: Imagine paying $10,000 for 1000sh of some dogshit stock that you heard about on the Nightly News. Funny huh? At this point we have it pretty good. The Bulge Bracket firms are sucking dick for beer money these days. For non-Marines: pardon the language.
Ok, I'm going to break it down for you, Marine Corps Style, like if I were talking to a platoon of new recruits at Parris Island. IF all the financial markets in this country were to go COMPLETELY electronic. NO Marketmakers, NO Brokers and and the IPO bypasses the investment bankers and there are no brokers and absolutely NO middlemen taking profits and passing their fees onto you. Again, COMPLETELY electronic. There would be no reason for commissions or even fees. Perhaps a small flat monthly fee to maintain the network and the electronic components of this system and keep it from crashing and to keep it flowing smoothly. Yes I realize there are times when a specialist would have to step in in the rare instance that something really screwy goes on. But eventually, don't you think we can get rid of ANY and ALL middlemen as technology is perfected and go straight from the IPO to the trader, effectively taking the human component out of it. This is the point I'm TRYING to make.
The world depends on middle men in almost every industry. Honestly a perfectly efficient electronic market would be extremely hard to extract money from so be careful what you wish for.
Right, and if we didn't have all the excess in the military, we'd have much lower taxes. If you want to apply your thinking to the markets look closer to home .. and by the way, I worked as a consultant at one time to the military and know how much waste exists. What exists in the military makes the markets look dirt cheap. No intent to flame .. just stating my experiences.
If there are no middlemen and no fees, who mails you a statement every month, files your 1099, answers the phone when you want to complain about something, clears your trades, provides market data, sends you a check or wire when you want to redeem your account, writes new and better trading platforms, pays for the Internet bandwidth to the exchanges, locates shares for you to short, enforces margin requirements, etc. I think direct access brokers are pretty competitive these days. I feel like I'm getting a reasonable value for my commission dollar. But, I swing trade so maybe I'd feel differently if I were doing millions of shares. Personally, if I were going to complain about Wall Street ripping me off, I'd complain about market data fees. It's not a lot of money but it's all profit. The exchanges have a monopoly on market data so even though the marginal user probably costs them less than a dollar, they charge us $200 a month. Martin
Of course there are excesses in the military. The useless Admin that lose your file and try to blame it on you for not checking in to see if your file is in their posession (yes, I actually saw this happen more than once to a couple of junior enlisted marines) and I could name several other nonessential elements that we could get rid of that noone would miss. Even though there are certain parallels between the military machine and the market, they are still completely different animals. My main point is this market is far from efficient and there is still too much corruption and shady dealings on the part of the various levels of middlemen. And yes I believe most of these middlemen can and should be eliminated. I think it's a gigantic conflict of interest for the very men who are supposed to regulate the market and make the market fair are also the ones profiting off of it, often gaining an unfair advantage. (Specialists seeing the whole book, front-running, etc.) The clerical functions mentioned by the individual below this post can be outsourced to independent agencies that are complete separate from the markets. Too much power and influence in the hands of too few men.
And I'm going it down for you for you elementary style. The point you think you are trying to make is way the market microstructure has been going (read: trend) for the last 40 years. You aren't making any point that hasn't been thought of, discussed and dissected a million times. What you do need to do is wake up, back off, get some experience in this world (trading) and RECOGNIZE Is that clear? If so Bravo Zulu, if not then read the last line again until it is.
Really, dissected a million times huh? And you don't think traders, especially the little guys would appreciate less fees and even less manipulation? That's the way it's always been done so why bother changing it even if it does improve the system right? Thought you were a marine, standng up for what you think should be changed and is right. You know, that little thing called intestinal fortitude that you were supposed to develop in boot camp and during your career as a marine? I realize it would be very difficult to change the entire system but if the traders pushed hard enough and called for change, it will eventually happen.
Perhaps you just don't give a damn about the little guys or the junior marines that had the misfortune of having you as their squad leader. But having worked my way up from PFC to Sergeant then going through OCS and working my way through the Officer ranks, I actually do care because I've been there. And what exactly would you like me to recognize there marine? And are you actually telling a marine to back off? When the hell has a marine ever backed off? I'm beginning to wonder if you really are a marine.
Can you not read? If so, can you not comprehend what you read? For the last time.... market microstructure is changing constantly. The "little guy" is saving more now in his transaction cost than he ever has in the history of organized markets. There is less friction in the market place than has ever been. Is it perfect? No. But, my friend you are most definitely not on to any thing groundbreaking here. 1) Ten years ago there were about 60 specialist firms on the NYSE....now there are maybe 5. 2) The ISE has more electronic options volume in 4 years than do ALL of the other 5 option exchanges combined. 3) NITE and HERG were massive money making NASDAQ market makers 5 years ago. Now they don't exist (virtually) 4) The CBOT 30yr bond pit is a freeaking ghost town. 7 years ago youâd get killed if you as a new guy tried to get a spot in the pit. 5) When trading the SPX options I used to be happy if I got a fill or a cancel in 45 minutes. Now if it doesnât happen in 20 seconds Iâm wondering whatâs wrong. 6)When I started trading in the early 90âs I traded with a phone in each ear and one over each shoulder, with broker or trading floors on all 4. Now I can do the same thing from a laptop living at 6000ft in the Sierras. I could go on and on. Do you think these events occurred because there is more friction in the market place, or less? As a result do you think "the little guy" is saving more money or less? Is it perfect? No. But let me assure you everything market related that is not geared to efficiency and cost savings is on a respirator....dying a painful death. Further, with regard to your manipulation paranoia. Do yourself a favor and visit any organized trading floor and you'll see guys just like you struggling to survive in a harsh trading world. Yes, some manipulation exist these days but it is VERY VERY rare and VERY far between.