I am a believer in daylight. Exchange arbitrage, stock or options, letting price "improvement" in fractions of a cent in front of resting orders that are providing the true liquidity to occur, etc etc only benefit insiders. Go back to when Nasdaq stocks traded on the phone which would be an extreme number of exchanges and dealers didn't pick up their phones when there was a crash.
I prefer the futures model where everything is on one exchange.
I agree, there are a lot of advantages to a single CLOB. Different market models do speak to different customer order types though, so I think a combination of pro-rata and maker-taker markets does create both tight and deep markets. Is the right number 16 though? Probably not.
Meaningful is the key word when it comes to price improvement, and much of the criticism of the NYSE's "Retail Liquidity Program" that only improved equity orders by fractions of a penny is deserved.
I am a believer in daylight. Exchange arbitrage, stock or options, letting price "improvement" in fractions of a cent in front of resting orders that are providing the true liquidity to occur, etc etc only benefit insiders. Go back to when Nasdaq stocks traded on the phone which would be an extreme number of exchanges and dealers didn't pick up their phones when there was a crash.
I prefer the futures model where everything is on one exchange.
I agree, there are a lot of advantages to a single CLOB. Different market models do speak to different customer order types though, so I think a combination of pro-rata and maker-taker markets does create both tight and deep markets. Is the right number 16 though? Probably not.
Meaningful is the key word when it comes to price improvement, and much of the criticism of the NYSE's "Retail Liquidity Program" that only improved equity orders by fractions of a penny is deserved.