Today’s the day. It’s time #WeTheInvestors rise up and take action against the dark underbelly of Wall St trading: we-the-investors.org 🧵⏬ (1/)
From @jonstewart’s latest episode to @spencerjakab’s recent book to the new @hbo doc by @tobiasdeml, there’s an unprecedented level of discussion & debate about market structure problems in the popular discourse (2/)
@jonstewart@Spencerjakab@HBO@tobiasdeml It’s disgusting, really. For too long, firms that productize their users and whose entire business model is one big conflict-of-interest have ensured that markets remain complex, opaque, and most importantly, extremely profitable for them (3/)
@jonstewart@Spencerjakab@HBO@tobiasdeml These players have always wielded the power and the purse strings. They've written the rules. But now, with tens of millions of investors having joined the markets in recent years, it's time to change that dynamic and reform market structures in service to #WeTheInvestors (4/)
@jonstewart@Spencerjakab@HBO@tobiasdeml#WeTheInvestors want transparency, control and trust in our financial markets; we want our interests represented accurately; we want our voices heard and not drowned out by those who profit off of and treat us as products rather than customers (5/)
@jonstewart@Spencerjakab@HBO@tobiasdeml#WeTheInvestors is a platform of market structure changes that will improve disclosures, reduce market complexity, improve execution quality, provide deeper, more direct relationships between issuers & investors, & will ensure that corrupt business models are ended (6/)
@jonstewart@Spencerjakab@HBO@tobiasdeml We've brought together an exciting coalition of firms who also want to improve market structure for you, representing nearly every part of the trading ecosystem: @public@PaxosGlobal@prooftrading to start - more will be announced in the coming weeks (7/)
I watched the @hbomax documentary "Gaming Wall Street" by @tobiasdeml. The doc does an incredible job of boiling down some very complex and difficult topics, and makes them accessible to a broad audience. I'm going to thread some choice quotes here - there were so many good ones.
@hbomax@tobiasdeml TRUTH: "One of the real problems with Washington policy-making is that it’s dominated by money, and it’s dominated by the lawyers and lobbyists of those who have money, and really… nobody has more money than the financial industry. They have an army." @DennisKelleher
@hbomax@tobiasdeml@DennisKelleher "The financial returns that they get for their investments in manipulating Washington DC is way better than really any return they can get on Wall St or in the markets. Where does it all go to? … To tilt the playing field in favor of the banks." @DennisKelleher
We've got a 17th stock exchange! Sort of. This new exchange is called BSTX and it's operated by tZERO and BOX (options exchange operator). The SEC's approval resulted in some interesting headlines.
The problem is none of them are accurate.
BSTX's original intent (as far as I can tell from press releases) was to build a security token exchange powered by tZero's blockchain tech. However, it appears that the SEC was not receptive to some of BSTX's ideas.
I've read through the various filings, some of the comment letters, and the approval (sec.gov/rules/sro/box/…), so here are some thoughts.
There are several things going on here. First, the NBBO is a flawed benchmark, one that is being damaged & widened by the very practice of PFOF/internalization.
It’s like marking up a TV by 25% & then giving your customers 1% off and telling them they’re saving a ton of money.
Second, there are often better prices out in the market that the internalizers know about, and I show a trade that looks very much like front-running, albeit at millisecond timescales.
2022 will be a monumental year in market structure, w/big proposals coming from SEC on off-exchange trading and PFOF. Part of what we will do @UrvinTerminal is make sure that retail has a well-informed voice in this debate. Support our efforts here: wefunder.com/urvinfinance/
@UrvinTerminal I believe in leveling the playing field - getting retail investors access to the same high quality data and tools that the professionals have.
I believe in truly democratizing information, data and access - not turning retail into a product to be sold to high-speed speculators.
I believe that you can align incentives so that everyone wins, while taking on the biggest and most powerful incumbents on Wall St.
I believe we can change the system when we work together, point out corruption, and build a movement so big, it can't be ignored!
Ok, it’s time for some game theory. For real! Let’s talk about the conflicts-of-interest at the heart of nearly all equity routing today – rebates & payments. These inducements (that’s an important word) influence how brokers route orders, for retail and institutions.
First of all, for retail, I think everyone understands that PFOF involves market makers paying brokers to send retail orders to them. Most of the time these are marketable orders. Limit orders are often sent to exchanges.
For example, here is Fidelity’s order routing showing marketable orders going mostly to Citadel and Virtu, and non-marketable orders going to NYSE and Nasdaq. Non-marketable limit orders receive a rebate when they are sent to an exchange