Friday, April 30, 2010

Is NYDE next for NYSE - could ADD derivatives trading, clearing - why not?

For over a century the NYSE has functioned and functioned well as a trusted, regulated and most important OPEN "market place" displaying timely relevant data for stocks, bonds and more recently I believe certain options (derivatives contracts upon stocks).

Importantly, the NYSE has reported stock margin borrowings for decades, and has assisted investors in understanding this - how much so called "market value" is accounted for by speculative money and associated speculators - failure to report such borrowing in the MBS derivatives and related "so-called" markets denies market participants a true measure of value - that of 100% "fully paid for" securities - a measure notably absent when single, discrete, and I might add too "discreet" firms.


TAKE AWAY THE ABILITY OF SINGLE FIRMS like Goldman Sachs, Morgan Stanley et al to make markets in certain types of contracts
when - as we have seen - pose too many, some insurmountable conflicts of interest.

This proposal continues to allow the Investment Banks to "create" new contracts - but the price discovery of OPEN markets is a liqidity enhancer; that is if the contracts themselves are viable in helping investors manage risk. Because as we know - at base - that's what it's all about.

Ending the siesta on the US taxpayers' dime one simply stated, easy to digest little blog at a time.

No comments: