REDUCING EXPENSES: Operating an “investing strategy” stock exchange costs less for infrastructure, which costs investors less per transaction.
Want to know the dirty little secret of our markets? Long-term investors have always subsidized the costs of trading for speculative investors and short-term traders.
HISTORY: If you buy a share as a long-term investor, you pay the same per-share transaction fee as a speculative trader. However, the capacity required to support the infrastructure of trading is radically different. Traders send multiple messages for every trade they execute, testing the waters before they find the perfect place to enter a trade (nanoseconds and pennies matter).
For example, the current NYSE daily average volume is approximately 1 billion shares a day, but messages, including dark messages, are estimated at 50 to 100 times that (we don’t know because the dark market is exactly that: dark). The size of the infrastructure needed to support that volume is incrementally more than if only long-term investors were transacting.
We encourage all participants of ISM to understand the underlying motivations for each type of investor. The markets are here for all types of participants — but with ISM we will not punish long-term investors in the process of managing the volatility of speculators. There is no dark world with ISM.
We believe our participating investors and business owners will also save money on ISM through reduced fees and anticipated less volatility.
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