خرید و دانلود نسخه کامل کتاب Equity Trading Round-Up: Proposals for Strengthening the Markets – Original PDF

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.1 Trading, and the creation and/or concentration of liquidity, is just the first link in this same value chain. Since we are also talking about regulation at our annual Baruch conferences, we have to remember some key developments. For instance, in Europe, you will see the vital role of central counterparties—pools of liquidity providers—as the second link in the value chain. If you want to trade in international markets, clearing services are a perquisite. Clearing is primarily about managing counterparty risk, usually on a state-of-the-art, real-time, online platform, so that the data on trades can be used by the markets for their risk management. Clearing houses also deal with market risk. If you accept a specific product at your clearing house, you can sum it up, see the key players, and all the positions that have accumulated in that product. You can run stress tests to evaluate potential outcomes under different market conditions, and impose margin calls on clearing members accordingly. In other words, you can estimate the market risk associated with the product and the market players. At the end of the day, clearing houses play a major role in preventing the domino effects that can harm financial markets. Custody is the third link and the third liquidity pool in the value chain, where this fight for liquidity takes place. And we are talking big volume.