blankmind,
Nice interview. I'm listening to it now. Idle thoughts:
1. The interviewee's example of a spread of 20 x 20 1/2 (to show why ECN's are better by improving the spread), is a bit nonsensical. The spread on most stocks now, including thinly traded stocks, is less.
2. I don't buy the theory of how ECNs actually aid liquidity of thinly traded stocks, by attracting buyers who would bid "in the middle" of a spread. I can bid in the middle now through a market maker. And, if I bid at the ask, I'll get filled, to boot. And I won't get a partial fill either.
3. ECNs charge 1.5 cents per share per the interviewee, sliding down from there. So, 1000 shares can cost $15. How in the world is an OLB going to support this when they are now charging $15 or $10 for the trade itself? Suddenly, when routing through an ECN, the cost of the trade actually has to INCREASE to $30 ($15 to pay for the ECN fee, $5-10 to make up for the order flow fee not being received from the market maker and another $5 for profit). Geesh!
Gary Korn |
