So weird in so called democratic USA. I like to say US is aristocratic and not democratic!!
Some examples:
* Historically IPOs give handsome return to investors but big brokerages give IPO stocks to rich investors. This makes rich richer!!! Shouldn't a common man have equitable access to IPOs?
* When you put a limit order for options, you have to trade in increment of 5 or 10 cents but if you see the order book, there are big investors, institutions who are able to trade in 1 cent increments. So if you are waiting to buy some options at say 75 cents and not willing to pay 80 cents, someone can sit ahead of you by paying 76 cents and you get no right to offer 76 or 77 cents!!
* When I trade stocks, I have to buy with 2 decimals. Say 30.45 cents but many institutions, market makers can get ahead by paying 30.451! Most common investors are not allow to go to third decimal!!!
Anyway, democratic USA is not complaining so why should I ruin your day???
A good read:
(Reuters) - The pricing model used by U.S. stock exchanges to attract liquidity came under fire on Tuesday, as a top Wall Street executive called for ending the practice and two U.S. senators raised concerns about the potential conflicts it creates.
In a Senate hearing, an official from Intercontinental Exchange's (ICE.N) New York Stock Exchange expressed support for ending the "maker-taker" model used to reward brokers who make offers to buy or sell stocks on exchanges.
"We are seeking support for the elimination of maker-taker pricing," said NYSE President Thomas Farley. "Broad adoption of this policy would reduce the conflicts inherent in such pricing schema."
A top official at Vanguard also called for revisiting the practice, saying it has become too conflict-ridden.
Tuesday's hearing before the Senate Permanent Subcommittee on Investigations comes shortly after author Michael Lewis released a book that raised questions about payment for order flow and accused high-speed traders of rigging markets.
Earlier this month, Securities and Exchange Commission Chair Mary Jo White announced a series of proposed reforms to address high-speed trading, trading in anonymous "dark pool" venues and potential conflicts that may influence how brokerages route customer orders.
White also asked exchanges to review order types, an issue Farley said his exchange will address in part through a six-month moratorium on permitting any "new or novel" order types.
But while White outlined a proposal to enhance disclosures surrounding how brokerages route institutional orders, she did not explicitly propose maker-taker reforms.
STUDY RAISES QUESTIONS
In the maker-taker model, brokerages earn rebates by sending in resting orders to bring more liquidity, but must pay fees if they take away liquidity through orders that can be executed immediately.
Full article at: http://www.reuters.com/article/2014/06/17/us-senate-hearing-markets-idUSKBN0ES1PN20140617
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