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Thanks. I was going to ask for a citation. Vanguard is 100% correct, though there should probably be fewer exchanges in the first place.

tptacek 11y ago
There should be fewer exchanges and less competition? Why?
- kasey_junk 11y ago
  Yesterday Levine posited that less fragmentation of exchanges makes more economic sense: http://www.bloombergview.com/articles/2016-02-24/oil-loans-and-cohen-cubs http://www.bloombergview.com/articles/2016-02-24/oil-loans-a... I found it odd given what we saw in the US exchanges was the opposite of that before fragmentation, but the argument is that the network effects of large exchanges reduces the overall costs.
- theseatoms 11y ago
  On exactly what front are exchanges competing? Order types? Fees? Volume? Differences in any of these are very often opaque to the customer. From what I've seen, exchanges are basically functionally equivalent, since they provide a utility-like service. And, as Vanguard points out, more trading venues means higher market frictions and costs. TBH I'm still trying to forming a strong opinion on the issue, as indicated by "probably" in my initial comment. And I think it's a topic worth discussing.
  - gnaritas 11y ago
    It doesn't matter if it's opaque to the customer or if every exchange is selling an identical product; there's reason for multiple exchanges to exist to avoid monopoly. Multiple players want to play in the market, that means multiple exchanges. Saying there should only be one exchange is picking a winner and giving them the entire market.
- minimax 11y ago
  One of the reasons that there are currently so many stock exchanges in the US is that while you aren't allowed to quote at subpenny levels, if you have several exchanges with different levels of make/take fees, you effectively have the ability quote (or remove liquidity) at subpenny price levels net of fees and rebates. In that scenario the proliferation of exchanges is less about competition and more about finding clever ways of negotiating the regulatory environment.
gnaritas 11y ago
> though there should probably be fewer exchanges in the first place. Why, what's wrong with distribution and competition? These are good things.

tptacek 11y ago

There should be fewer exchanges and less competition? Why?

kasey_junk 11y ago
Yesterday Levine posited that less fragmentation of exchanges makes more economic sense: http://www.bloombergview.com/articles/2016-02-24/oil-loans-and-cohen-cubs http://www.bloombergview.com/articles/2016-02-24/oil-loans-a... I found it odd given what we saw in the US exchanges was the opposite of that before fragmentation, but the argument is that the network effects of large exchanges reduces the overall costs.
theseatoms 11y ago
On exactly what front are exchanges competing? Order types? Fees? Volume? Differences in any of these are very often opaque to the customer. From what I've seen, exchanges are basically functionally equivalent, since they provide a utility-like service. And, as Vanguard points out, more trading venues means higher market frictions and costs. TBH I'm still trying to forming a strong opinion on the issue, as indicated by "probably" in my initial comment. And I think it's a topic worth discussing.
- gnaritas 11y ago
  It doesn't matter if it's opaque to the customer or if every exchange is selling an identical product; there's reason for multiple exchanges to exist to avoid monopoly. Multiple players want to play in the market, that means multiple exchanges. Saying there should only be one exchange is picking a winner and giving them the entire market.
minimax 11y ago
One of the reasons that there are currently so many stock exchanges in the US is that while you aren't allowed to quote at subpenny levels, if you have several exchanges with different levels of make/take fees, you effectively have the ability quote (or remove liquidity) at subpenny price levels net of fees and rebates. In that scenario the proliferation of exchanges is less about competition and more about finding clever ways of negotiating the regulatory environment.

gnaritas 11y ago

> though there should probably be fewer exchanges in the first place. Why, what's wrong with distribution and competition? These are good things.