You can add location information to your Tweets, such as your city or precise location, from the web and via third-party applications. You always have the option to delete your Tweet location history. Learn more
I like this Citadel Securities paper on market structure reform - while it may be biased it is a well written overview of the US exchange landscape & is worth reading. A thread reviewing the paper & what I agree with: https://s3.amazonaws.com/citadel-wordpress-prd101/wp-content/uploads/sites/2/2021/05/03130457/EnhancingCompetitionTransparencyandResiliencyinUSFinancialMarkets.pdf …pic.twitter.com/JDzxq8Vt5i
In 2005 Reg NMS came into effect with the goal of promoting exchange competition & protecting investors. It helped off-exchange venues compete for equity market share. The law worked - nearly 50% of all equity trades now happen off a public exchange:pic.twitter.com/ncOO9QaGbh
Reg NMS got a lot of things right, but it isn't perfect. New entrants have made the market more fragmented, and its becoming clear now that legacy exchanges can't compete in today's market. CitSec's paper gives a few remedies to the issue:pic.twitter.com/gF1pU0S36i
1) Tighten tick sizes on exchanges Today exchanges can only quote prices in increments of $.01 or more. Off-exchange venues can quote in sub-penny increments and can offer tighter spreads. CitSec argues sub-penny increments on exchange would help level the playing field.
2) Reducing exchange fees Sub-penny tick sizes would hurt market maker profitability and could hurt liquidity. CitSec says this can be offset by lowering exchange fees to keep MM profits relatively whole and liquidity flowing through the market.
3) Updating Reg ATS The SEC's market structure rules are now almost 20 years old. CitSec argues existing loopholes give off-exchange venues an unfair advantage by being exempt from public reporting. Updating these rules may help the market understand these venues better.
4 Don't Ban PFOF Here's where the bias is showing, but CitSec argues that payment for order flow shouldn't be banned in a vacuum. Exchanges pay for order flow in the form of rebates - why ban one venue's incentive tool and not the other?
5) Make PI Statistics More Clear Reg NMS establishes the NBBO which is filled with exceptions & workarounds. CitSec argues the value they're providing retail clients is much larger than official numbers because Reg NMS doesn't capture all trades. Virtu argues a similar point:pic.twitter.com/gqVueSIk5i
6) Move to T+1 Settlement Other industry participants are calling for this as well - shorter settlement times would reduce capital requirements at the DTCC and should mean lower trading costs. One day settlement would still give the clearinghouse time to catch & fix mistakes.
Overall I agree with many of the points Citadel argues in the paper. The key is to promote competition between exchanges & other venues without creating fragmentation. Lower tick sizes, shorter settlement & better reporting help this happen.
This is called throwing a bone
I'll do an XTX reform paper next how about thatpic.twitter.com/qPaA6HE5V9
Twitter may be over capacity or experiencing a momentary hiccup. Try again or visit Twitter Status for more information.
