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Über dieses Buch

This book examines the complexity of trading and the creation of liquidity. Titled after the Baruch College Financial Markets Conference, Equity Market Round-Up: Proposals for Strengthening the Markets, this book explores how regulation has a clear impact on market structure and, therefore, how market structure impacts efficient trading and capital formation. The following questions are analyzed: What are the liquidity strategies for pricing and interacting? Is liquidity any more available today for an illiquid stock than it was on the floor of the exchange 20 years ago? How do we cope with the dynamics of a continuous market? How can market structure be improved? What are the effects of high frequency trading?

The Zicklin School of Business Financial Markets Series presents the insights emerging from a sequence of conferences hosted by the Zicklin School at Baruch College for industry professionals, regulators, and scholars. The transcripts from the conferences are edited for clarity, perspective and context; material and comments from subsequent interviews with the panelists and speakers are included for a complete thematic presentation. Each book is focused on a well delineated topic, but all deliver broad insights into the quality and efficiency of the U.S. equity markets and the dynamic forces that are changing them.



Chapter 1. Trading, Clearing, Custody, and the Worldwide Evolution of Exchanges as Unique Organizations

There is a singular battle among exchanges that never ends. This battle is an eternal fight for the lifeblood of any exchange—it is for liquidity and order flow! And, by the same token, institutional investors at the other end of the value chain—that is, hedge funds, mutual funds, and other big investors—are also fighting each other for the generation of order flow.
Reto Francioni

Chapter 2. Coping with Liquidity Provision

LARRY TABB: This panel, Coping with Liquidity Provision, sums up, to a certain extent, what our industry is all about. That is, trying to find the other side of the trade; trying to find liquidity; trying to find how we price liquidity; and about how we interact with liquidity.
Larry Tabb, Nazli Sila Alan, Jonathan Clark, Frank Hatheway, George Hessler, Adam Inzirillo, Timothy J. Mahoney

Chapter 3. The View from Here

COWAN: When I read the title of this conference, “Equity Trading Roundup: Proposals for Strengthening the Markets,” I immediately thought of corrals and horses, and I wondered if I had stepped into the wrong city, if I was travelling in the wrong direction by coming here to New York instead of to somewhere in the West! [laughter.] Of course, thankfully, that is not the case.
Kevan Cowan

Chapter 4. Coping with the Dynamics of a Continuous Market

ROBERT SCHWARTZ: Our next moderator, Amber Anand, is now based a long way from New York City — in Syracuse, upstate New York, to be precise. My goodness, he’s practically in the snow belt these days!
Amber Anand, Amy Edwards, Vijay Kedia, Dmitry Bulkin, Richard Carleton, Philip Pearson, Robert Shapiro

Chapter 5. Strengthening the Infrastructure

ROBERT SCHWARTZ: Our moderator, Rich Repetto is a well-known industry practitioner who needs no lengthy introduction. Welcome, Rich!
Richard Repetto, Bill Harts, Eric Swanson, Boris Ilyevsky, Eric Noll, Brett Redfearn

Chapter 6. A Closer Look at How to Improve and Repair Market Structure

ROBERT SCHWARTZ: I am very much looking forward to our next speaker, Seth Merrin. Our friendship and working relationship go back a long way. As you well know, Seth is a pioneer in his field. In my opening remarks, I said we need more competition in the area of innovation. We need innovators. And so it was only natural for me to call Seth, who is a great innovator. He accepted my invitation without any hesitation. I’m now delighted to introduce Seth.
Seth Merrin

Chapter 7. Regulatory Initiatives

ROBERT SCHWARTZ: Jim Ross is a big guy with a lot of really interesting ideas. He is also my close personal friend. Over the years, we’ve discussed and debated market structure ad finitum. We’ve agreed and disagreed on many topics. I’m very much looking forward to this panel with Jim as the moderator.
Jim Ross, Robert Colby, Jonathan Kellner, John Ramsay, Dave Weisberger

Chapter 8. Unraveling the Complexity of Market Structure

ROBERT SCHWARTZ: It’s a distinct pleasure to introduce and listen to our guest speaker. Tom Farley is here to present our closing address. Tom has moved into a changing environment, and he’s part of the changes in market structure. It’s changed for the New York Stock Exchange; it’s changed for you, and hearing your thoughts, Tom, in this context, is of tremendous value. Tom, thank you so much for being with us today.
Thomas Farley

Chapter 9. A Liquidity Program to Stabilize Equity Markets

We consider a program that, by bringing additional liquidity to the equity markets, would benefit market participants, listed companies, an exchange, and the broader economy. Established by an issuer, managed by a third-party broker-dealer intermediary, formally structured and maximally transparent, the program involves corporate share repurchase in a falling market and issuance in a rising market. We use simulation analysis to assess the procedure for 30 Dow and 30 DAX stocks for the 5 year span, 2008–2012; our findings indicate that the program can generate profits for firms that institute it, and we suggest that additional steps be taken to refine, further test, and implement the procedure.
Nazli Sila Alan, John S. Mask, Robert A. Schwartz

Chapter 10. Invited Editorial: Combatting Turbulence in the Equity Market—Get the Listed Companies on Board

What participant in the equity markets could ever forget the month of October, 1987? It was a wild, turbulent time, and Monday, October 19, was a black day: the Dow Jones Average of 30 industrial stocks dropped 508 points on that day to close down 22.61%. But the dramatic plunge on the 19th is not what captures our attention in this piece. Rather, it is the sharp market swings of over a quarter of a century ago, and the fact that, to the current day, bouts of sharply accentuated short-period volatility continue to characterize our equity market. How, we ask, might such turbulence be dealt with?
Nazli Sila Alan, Timothy Mahoney, Robert A. Schwartz
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