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How would this be better than what we have now? Right now stocks already go to the highest bidder - if there is a seller willing to sell at that price. how wo
by hogu 14y ago
How would this be better than what we have now? Right now stocks already go to the highest bidder - if there is a seller willing to sell at that price. how would you run an auction if there are 40 firms trying to sell the same stock?
The ad market is well suited towards auctions because you have one seller for many buyers, but in finance you have a symmetric relationship between buyers and sellers.
- bokonist 14y agoGoogle "HFT frontrunning". The issue is that HFT algorithms can use their superior speed and the ability to cancel orders to essentially figure out what institutional buyers are bidding, and then front run the market to buy up shares in front of them. This would be prevented in my system by the black box auction and trading on an interval.
- sseveran 14y agoThere are many opportunities for institutional investors to trade in exactly the manner you suggest. NASDAQ runs the opening and closing cross as well as other intra-day crosses. Other platforms allow private crosses, dark pools allow crossing not in public and today 1/3 of all shares are crossed internally on brokerage platforms. Institutional investors have many opportunities to trade in the dark. There is a price to be paid for instantly accessing liquidity in the market, and it is much cheaper than it used to be.