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There's absolutely nothing stopping the big institutional players setting up a private secondary exchange between themselves which doesn't allow short-term trad
by ig1 16y ago
There's absolutely nothing stopping the big institutional players setting up a private secondary exchange between themselves which doesn't allow short-term traders (even using something like a dark pool if they want to keep sizes quiet). The reason they don't is because exchanges that have short-term traders have more liquidity and better prices.
- joshu 16y agoAnd in fact they did, years ago. Lots of block trades go across posit or whatever.
- lrm242 16y agoThey do set up off-exchange venues. Any of the block trade matching services, for example. There are also sources of liquidity that require non-trivial amounts of capital to access like dark pools. Regardless, each of these venues provide additional service that compensates for their reduced liquidity. Posit, for example, helps you match large, anonymous block trades at prices that might be inferior to the NBBO, but only inferior within limits. The benefits to you, the user of posit, are clear. Get very large orders crossed with some bounded market impact. For this, you're happy to pay the price.