4 ms·
if a single stock can damage the entire system - perhaps it is the system that's not well designed?
by inter_netuser 6y ago
if a single stock can damage the entire system - perhaps it is the system that's not well designed?
- QuesnayJr 6y agoThe system isn't well-designed. The actual mechanics of the stock trading process are jury-rigged to allow for the high volumes of trade we see. People have speculated that this is an area of application for distributed ledger technology, but the Australian Stock Exchange has been trying to roll out such a system and it has been slow: https://www.fintechfutures.com/2020/07/australian-securities-exchange-delays-blockchain-go-live-to-2022/ https://www.fintechfutures.com/2020/07/australian-securities...
- robinei 6y agoIt seems like shorting alone can create this kind of systemic risk, with its infinite downside. One has to question whether it might be better were it not allowed.
- rswail 6y agoThe systemic risk is because the intermediaries have to use their liquidity to keep the system moving, not because the short sellers might go bankrupt. Trading in securities with daily settlement, while movement of money is not operating on the same frequency, means that there is a requirement for someone to take that risk. That's the systemic risk, not the trading itself. If the execution, settlement, and clearing of a trade were simultaneous and instantaneous, then there's no risk to the market itself.