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Lets say we go to a call structure. Will there be competitive pressure to go back to a continuous market? For example, lets say you demand all U.S. exchanges go

• 001sky 13y ago
  You're illustrating regulatory arbitrage. The answer to that question is always: it depends. Not helpful, I know. But IMHO the issue is not so much here understanding all of the -N- ways to regulate the problem. It's helpful in the first instance to have clear articulations of the problem you need to consider. Market micro-structure is like taxes. It's almost impossible to generalize an answer. An "actual answer" will entail a level of detail and laywers fees that is prohibitive to discuss "for fun" =D. We can apply this critique to all of these academic papers too: they are abstractions and model-markets. The actual particulars of any given order routing...etc. So what is the purpose of this even being posted? It is simply to illustrate how sub-optimal outcomes are possible on a whiteboard. The general takeaway is there is a problem (worsening equilibrium) and a solution (improving one) that relate to tweeking the variables (timing/trade sequencing) discussed upthread. Those are not purely neutral or unrelated to welfare outcomes. It helps to have someone else spell it out sometimes. Both to save the brain damage of spelling it out in HN comments, and also to provide some fresh voices to the dialogue.