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Actually prior to governmental action the markets were quite fragmented. In the 70s in response to securities law they started consolidating. Then in response t
by kasey_junk 6y ago
Actually prior to governmental action the markets were quite fragmented. In the 70s in response to securities law they started consolidating. Then in response to further law they started fragmenting again in the 2000s.
I’m not largely a free market is the only solution person but this is a very bad example of ‘natural’ monopolies.
- maest 6y agoLiquidity begets liquidty, so it makes economic sense for exchanges to consolidate in a completely free market.
- kasey_junk 6y agoIt makes sense all things being equal, but that isn’t the case. Even in the old consolidated system you had differentiation between the exchanges in the form of exchange rules which led to Nasdaq specializing in different listings than NYSE. If you look at the commodities exchanges they were even more specialized and splintered until legal interventions made those specializations less valuable. It was governmental intervention that made liquidity the only factor in exchange choice.