The rise of electronic and algorithmic trading has irrevocably changed how the financial markets operate. Equity markets have been known to be almost entirely electronic since 2015. Moreover, according to Greenwich Associates, over 90% of equity flows are executed electronically in liquid, developed markets like the U.S. It’s no secret that floor trading has dwindled. Just take a look at the floor of the New York Stock Exchange. When I was a specialist, there were thousands of traders and market makers on the floor of the exchange, but in the past decade or so that number has dropped to only a few hundred.
The definition of insanity is doing the same thing over and over again and expecting a different result.
SEC Rule 10b-18 sets the requirements for corporate stock buybacks and the rule’s “safe harbor,” which allows companies to purchase their shares in the open market without concern that their activities could later be deemed to be manipulative under the law. One of the requirements of the Rule 10b-18 safe harbor is that brokers buying stock for an issuer must buy at a price that is no greater than the higher of the last independent bid price or the last sale price.
These words are attributed to the renowned management guru, Peter Drucker who revolutionized the way people thought about running businesses. Although there is some debate as to whether he actually uttered these words, this maxim has become a part of corporate philosophy for businesses as diverse as automobile manufacturers and advertising companies.
In our initial observation of the Tick Size Pilot*, we found a shift in liquidity from off-exchange venues to exchanges in G3 and a shift from maker/taker to inverted exchanges across all test groups. However, we did not observe the same increase in impact costs that other studies found. We concluded that the pilot may be showing signs of improved liquidity capture for institutional investors and we committed to measure and report the results of the pilot in the future.
M-ELO, Nasdaq’s Midpoint Extended Life Order, is a new order type that is designed to attract longer term investors to interact with each other by trading against other M-ELO orders at the midpoint of the NBBO.
Three years ago a dear friend sent me a link to an article. “This sounds up your alley,” she said. It was about an initiative to get high school girls into programming. As a female software engineer who went through her computer science classes surrounded by men, I was intrigued.
Traders have always strived to attain high quality executions, but measuring execution quality is now more important than ever.
Clearpool hosted its first development team hackathon this month, bringing together our team of technologists for a day dedicated to coding, creativity and complex problem solving. A few days prior to the hackathon, members of our software development and quantitative analysis teams were paired up and the eight teams began brainstorming ideas. The requirements for each team’s “hack” were that it benefit the company in some way and that they take only one day to come up with their proposed solution.