Hi Dominic!
Now that ECN's are hurting Nasdaq. They're deciding to go public
separate from the NASDR, and show their limit book.
There is something I can't understand reading about all these intentions to become separate exchange. Who and how would provide liquidity? When $10 stock with no volume for ages all of a sudden explodes on some hot news, who would sell it to trader? On NASDAQ, there are MMs that provide liquidity (they handle it poorly or great, it's another matter :). But on ECN/exchange where there are no (supposedly) anyone with old inventory, or anyone who is obliged to make market and in order to do so would sell short to first buyers?
Or marketmaking firms are supposed to be participants in these new exchanges? Then, what has really changed, except routing/execution rules which are supposed to be changed by NASDAQ too (see links in my post 2181)? My suggestion would be, if those questions are not regulated, we will see chaos with wild spreads, awful liquidity etc. And if they get regulated, we will see something pretty similar to NASDAQ or NYSE, depending which way regulators choose, only smaller and with all problems of new establishment.
May be someone who is more familiar with this matter cam comment?
Vadym |
