4 ms·

I always assumed that one can't simply launch a stock exchange, it has to be highly regulated and expensive to get into Steve Wunsch tried it in the late ninet

I always assumed that one can't simply launch a stock exchange, it has to be highly regulated and expensive to get into Steve Wunsch tried it in the late nineties with the Arizona Stock Exchange (http://www.businessweek.com/1997/09/b3516129.htm http://www.businessweek.com/1997/09/b3516129.htm). Interestingly, the hard part is less about regulation than market forces. You have to have listing standards (i.e., do the companies listed really exist, are their financial records accurate, etc.) that traders will trust, and you need a critical mass of buyers and sellers to start using it.

wagerlabs 18y ago
You don't need (want?) to launch an exchange these days. What you do is launch a so called "dark pool", an opaque matching engine, to provide liquidity. Then there are ECNs like http://www.batstrading.com/ http://www.batstrading.com/. See http://en.wikipedia.org/wiki/Electronic_communication_network http://en.wikipedia.org/wiki/Electronic_communication_networ... and google for Island, Instinet or BATS.
- Tichy 18y ago
  I voted you up even though I don't understand what you are talking about. But it sounds interesting...
  - ntoshev 18y ago
    The dark pools, or liquidity platforms, match orders up before they reach the exchange. Basically you have big orders sitting in the pool and waiting to match up with passing traffic. These orders are not publicly visible, so you get less price transparency than if all orders are matched through the exchange.
- dpapathanasiou 18y ago
  The point is the same: creating a dark pool (like an exchange) is more a market forces challenge, less a technical one. I.e., you still have to attract a critical mass of traders to your platform, and once there, you have to figure out how to deal with anonymity, backing away, and gaming issues. Even LiquidNet, despite its success in this niche, still has these problems.

wagerlabs 18y ago

You don't need (want?) to launch an exchange these days. What you do is launch a so called "dark pool", an opaque matching engine, to provide liquidity. Then there are ECNs like http://www.batstrading.com/ http://www.batstrading.com/. See http://en.wikipedia.org/wiki/Electronic_communication_network http://en.wikipedia.org/wiki/Electronic_communication_networ... and google for Island, Instinet or BATS.

Tichy 18y ago
I voted you up even though I don't understand what you are talking about. But it sounds interesting...
- ntoshev 18y ago
  The dark pools, or liquidity platforms, match orders up before they reach the exchange. Basically you have big orders sitting in the pool and waiting to match up with passing traffic. These orders are not publicly visible, so you get less price transparency than if all orders are matched through the exchange.
dpapathanasiou 18y ago
The point is the same: creating a dark pool (like an exchange) is more a market forces challenge, less a technical one. I.e., you still have to attract a critical mass of traders to your platform, and once there, you have to figure out how to deal with anonymity, backing away, and gaming issues. Even LiquidNet, despite its success in this niche, still has these problems.