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I don't understand, who outside of the investor is supposed to gain value from a public trade? Aren't all public security transactions valueless outside of the

• phyalow 14y ago
  In theory other cash equity holders, and to a lesser extent brokers, exchanges and potentially others in the order book...
• 001sky 14y ago
  Aren't all public security transactions valueless outside of the investor? -- No. Equity markets have massive economic externalities. This is true dimensionalized by mean (valuation) of price levels and variance (of price changes). There is a strong public policy rationale that markets be fundamentally fair, information efficient, and also <accurate> in their moves (ie, such that vol is ~correlated to changes fundamentals, not 'animal spirits', etc). A market with prices subject to random error variables that distort variance (even if mean neutral) is fundamentally <worse> than one without such pricing characteristics, for example.