4 ms·

It's interesting to see that people still believe there is some type of fair price discovery when things like dark pools, market maker exemptions, naked shortin

It's interesting to see that people still believe there is some type of fair price discovery when things like dark pools, market maker exemptions, naked shorting, tokenized securities, trillions in derrivative bets (hello 2008), spoofing (JP Morgan getting fined 1 billion after making 10 billion in profit in gold price spoofing) and so on and so forth exist. Speculation and gambling about what future prices will be are not the big issues here, the markets themselves are completely broken (by design).

RandomLensman 3y ago
What is the issue with a dark pool, for example? They are generally not designed for price discovery anyway.
- quote 3y ago
  But wouldn’t it be better if the volume at least is shown on open exchanges?
  - JumpCrisscross 3y ago
    > wouldn’t it be better if the volume at least is shown on open exchanges? Empirically, no. Large blocks of stock don’t have a liquid market. Forcing them into the open means chopping it into tiny pieces while using derivatives to hedge, for the sophisticated, and getting hosed, for the unsophisticated.
Rufbdbskrufb473 3y ago
You just listed a bunch scary sounding financial buzz words, but I doubt that a thorough analysis of them would support your conclusion. In fact, many have the opposite effect and result in more efficient price discovery. Take naked shorting for example. Without shorting, it would be far more difficult for an equity research firm to be incentivized to look into fraudulent stocks, as was widespread with Chinese companies a few years ago. Without their efforts, stock prices would have remained inflated for longer.
- quote 3y ago
  Isn’t that argument somewhat strange or dishonest? To paraphrase you: I‘d rather have naked shorting and the associated manipulation and problems with it than better price discovery for stockholders. In your example, the stockholder isn’t protected either, only an equity firm derives profit from this information. In a more ideal world the stockholders themselves would do this due diligence, which is something that already happens. Also there’s differences between shorting and naked shorting. I could well imagine allowing fully hedged shorting and outlawing naked shorting. Especially considering the issue of fail to deliver, that’s just absurd with our technology.
  - JumpCrisscross 3y ago
    > could well imagine allowing fully hedged shorting and outlawing naked shorting Many markets (e.g. Australia and Switzerland) do this. We have the comparative data to show it doesn’t do anything good while increasing volatility.
- johnnymorgan 3y ago
  You referenced due diligence as naked shorting but they are different. You listed a bunch of financial buzz words and didn't disprove OP. Please show how naked shorting incentivized good due diligence. You could have just pointed to the massive new supply that was announced, it's the logical reason why the price dropped. Geopolitics are the primary mover of markets currently.
- machina_ex_deus 3y ago
  You don't understand what naked shorting is. Naked shorting is shorting without first borrowing from someone. Normal shorting is limited by the availability of stock to borrow (by the way, if stock holders wish, they can request from their broker that their stock won't be available for borrowing, potentially causing short squeeze), by the interest rates on borrowing the stock. Naked shorting skips it all. Some market makers are privileged and can sell stock they don't own and didn't borrow. So they have a privilege of printing stocks in the short term, and that's quite broken, and many of them abused this position to manipulate markets. Normal participants in the market can't naked short. Naked shorting means that the market maker who supposedly sold you a stock, can now fail to find the stock he sold you, leading to "fail to deliver". The excuse given is that naked shorting allows for more liquidity, but given the other problems, I think it's bad.
danaris 3y ago
It's not by design, though. No one designed this system. It grew, organically. People started recognizing parts of it they could take advantage of, and pushing to have those parts become more prominent, largely individually (as opposed to in one grand conspiracy of collusion). It may be true that some of those people believe it is in their best interests that the markets be "broken", and so have pushed that far intentionally, but there is no one overriding will and no single hand on the rudder to even be able to do that on purpose. It's all just greedy people trying to get their own interests put before everyone else's.
bookofjoe 3y ago
"The secret of success in business is to know something no one else knows." —Aristotle Onassis How do you spell "insider trading?"
- lotsofpulp 3y ago
  My plumber/electrician/doctor is insider trading?
  - layer8 3y ago
    What does your plumber/electrician/doctor know that other plumbers/electricians/doctors don’t know and that is the secret of their success?
    - lotsofpulp 3y ago
      Forgot about the “no one else” knows part, but the point is being good at something (or knowing something others do not) is not a bad thing, as implied by “insider trading”. For example, if you figure out a cheaper alternative to lithium, and want to bet that lithium prices will fall as a result of reduced demand, then those are your spoils for figuring that out.
    - deleted 3y ago
      [deleted]
- pfdietz 3y ago
  Insider trading involves trading that violates a fiduciary responsibility. That is: you work for a company owned by shareholders, and you trade based on information you have as a consequence of that employment, harming the shareholders. Without that fiduciary responsibility, it's not insider trading, it's just trading. If you overhear someone with inside information talking about some inside knowledge, then trade based on that, you're in the clear (as long as you didn't collude with the leaker.)
- barrysteve 3y ago
  How do you spell "research and development". We aren't rushing to make nuclear fusion because we have insufficient electricity... and you can't replace what the scientists know with another coal plant. Global survelliance, inifinte database records and instant comms has really destroyed the potential to keep and develop real secrets. It's going to hurt (badly) in the long run. So insider trading for as long as GCHQ/CIA/NSA refuses to rat people out....

RandomLensman 3y ago

What is the issue with a dark pool, for example? They are generally not designed for price discovery anyway.

quote 3y ago
But wouldn’t it be better if the volume at least is shown on open exchanges?
- JumpCrisscross 3y ago
  > wouldn’t it be better if the volume at least is shown on open exchanges? Empirically, no. Large blocks of stock don’t have a liquid market. Forcing them into the open means chopping it into tiny pieces while using derivatives to hedge, for the sophisticated, and getting hosed, for the unsophisticated.

Rufbdbskrufb473 3y ago

You just listed a bunch scary sounding financial buzz words, but I doubt that a thorough analysis of them would support your conclusion. In fact, many have the opposite effect and result in more efficient price discovery. Take naked shorting for example. Without shorting, it would be far more difficult for an equity research firm to be incentivized to look into fraudulent stocks, as was widespread with Chinese companies a few years ago. Without their efforts, stock prices would have remained inflated for longer.

quote 3y ago
Isn’t that argument somewhat strange or dishonest? To paraphrase you: I‘d rather have naked shorting and the associated manipulation and problems with it than better price discovery for stockholders. In your example, the stockholder isn’t protected either, only an equity firm derives profit from this information. In a more ideal world the stockholders themselves would do this due diligence, which is something that already happens. Also there’s differences between shorting and naked shorting. I could well imagine allowing fully hedged shorting and outlawing naked shorting. Especially considering the issue of fail to deliver, that’s just absurd with our technology.
- JumpCrisscross 3y ago
  > could well imagine allowing fully hedged shorting and outlawing naked shorting Many markets (e.g. Australia and Switzerland) do this. We have the comparative data to show it doesn’t do anything good while increasing volatility.
johnnymorgan 3y ago
You referenced due diligence as naked shorting but they are different. You listed a bunch of financial buzz words and didn't disprove OP. Please show how naked shorting incentivized good due diligence. You could have just pointed to the massive new supply that was announced, it's the logical reason why the price dropped. Geopolitics are the primary mover of markets currently.
machina_ex_deus 3y ago
You don't understand what naked shorting is. Naked shorting is shorting without first borrowing from someone. Normal shorting is limited by the availability of stock to borrow (by the way, if stock holders wish, they can request from their broker that their stock won't be available for borrowing, potentially causing short squeeze), by the interest rates on borrowing the stock. Naked shorting skips it all. Some market makers are privileged and can sell stock they don't own and didn't borrow. So they have a privilege of printing stocks in the short term, and that's quite broken, and many of them abused this position to manipulate markets. Normal participants in the market can't naked short. Naked shorting means that the market maker who supposedly sold you a stock, can now fail to find the stock he sold you, leading to "fail to deliver". The excuse given is that naked shorting allows for more liquidity, but given the other problems, I think it's bad.

danaris 3y ago

It's not by design, though. No one designed this system. It grew, organically. People started recognizing parts of it they could take advantage of, and pushing to have those parts become more prominent, largely individually (as opposed to in one grand conspiracy of collusion). It may be true that some of those people believe it is in their best interests that the markets be "broken", and so have pushed that far intentionally, but there is no one overriding will and no single hand on the rudder to even be able to do that on purpose. It's all just greedy people trying to get their own interests put before everyone else's.

bookofjoe 3y ago

"The secret of success in business is to know something no one else knows." —Aristotle Onassis How do you spell "insider trading?"

lotsofpulp 3y ago
My plumber/electrician/doctor is insider trading?
- layer8 3y ago
  What does your plumber/electrician/doctor know that other plumbers/electricians/doctors don’t know and that is the secret of their success?
  - lotsofpulp 3y ago
    Forgot about the “no one else” knows part, but the point is being good at something (or knowing something others do not) is not a bad thing, as implied by “insider trading”. For example, if you figure out a cheaper alternative to lithium, and want to bet that lithium prices will fall as a result of reduced demand, then those are your spoils for figuring that out.
  - deleted 3y ago
    [deleted]
pfdietz 3y ago
Insider trading involves trading that violates a fiduciary responsibility. That is: you work for a company owned by shareholders, and you trade based on information you have as a consequence of that employment, harming the shareholders. Without that fiduciary responsibility, it's not insider trading, it's just trading. If you overhear someone with inside information talking about some inside knowledge, then trade based on that, you're in the clear (as long as you didn't collude with the leaker.)
barrysteve 3y ago
How do you spell "research and development". We aren't rushing to make nuclear fusion because we have insufficient electricity... and you can't replace what the scientists know with another coal plant. Global survelliance, inifinte database records and instant comms has really destroyed the potential to keep and develop real secrets. It's going to hurt (badly) in the long run. So insider trading for as long as GCHQ/CIA/NSA refuses to rat people out....