market fragmentation

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pages: 224 words: 13,238

Electronic and Algorithmic Trading Technology: The Complete Guide by Kendall Kim

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algorithmic trading, automated trading system, backtesting, commoditize, computerized trading, corporate governance, Credit Default Swap, diversification, en.wikipedia.org, family office, financial innovation, fixed income, index arbitrage, index fund, interest rate swap, linked data, market fragmentation, money market fund, natural language processing, quantitative trading / quantitative finance, random walk, risk tolerance, risk-adjusted returns, short selling, statistical arbitrage, Steven Levy, transaction costs, yield curve

They also cannot conduct trades away from the current best market price and must allocate orders according to price priority. Decimal pricing decreased the volume of stocks that had been available at prices that were fractions of a dollar into smaller pools available at prices that differ by just a penny. Algorithmic trading has become a solution for the problem of smaller spreads and market fragmentation. Algorithmic programs have the ability to slice parent orders, which are large blocks of shares, efficiently, ensuring that each tiny order or child order gets the best price. The emergence of new niche players in the algorithmic market has created variety among market makers but does not seem to pose a serious threat to bigger Wall Street broker-dealers.

The elimination of Rule 390, besides boosting the activity of ECNs, also enables brokerdealers to keep more order flow in-house. These restrictions run contrary to the Security Exchange Act of 1934’s objectives of assuring fair competition among market centers and eliminating unnecessary burdens on the competition.2 The NYSE has defended Rule 390 on the basis that it was intended to address market fragmentation by promoting interaction of investor orders without the participation of a dealer; however, the rule also restricts competitive opportunities of ECNs, which use innovative technology that also offers investors a high degree of order interaction. In 2000, the NYSE launched NYSE Direct, an automated service system, which currently executes 10% of the exchange’s volume.

According to the NYSE’s Web site, the NYSE Hybrid Market is an innovative response to customer’s needs, which integrates into one platform the best aspects of both the auction market and automatic trading. Under the deal with Archipelago, which accounts for nearly 25% of NASDAQ’s trading volume, the NYSE is expected to enter 2 ‘‘NYSE Rulemaking: Notice of Extension of Comment Period for Issues Relating to Market Fragmentation,’’ Release No. 34-42723 (File No. SR-NYSE-99-48), May 2000, http://www. sec.gov/rules/sro/ny9948n2.htm. 44 Electronic and Algorithmic Trading Technology into derivatives and OTC trading is expected to become more competitive with NASDAQ. 4.4 Exchanges Scramble to Consolidate The recent merger activity with stock exchanges has been a result of new technologies automating trade process flow such as ECNs, and regulatory intervention such as the repeal of Rule 390.


pages: 606 words: 87,358

The Great Convergence: Information Technology and the New Globalization by Richard Baldwin

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3D printing, additive manufacturing, Admiral Zheng, agricultural Revolution, air freight, Amazon Mechanical Turk, Berlin Wall, bilateral investment treaty, Branko Milanovic, buy low sell high, call centre, Columbian Exchange, commoditize, Commodity Super-Cycle, David Ricardo: comparative advantage, deindustrialization, domestication of the camel, Edward Glaeser, endogenous growth, Erik Brynjolfsson, financial intermediation, George Gilder, global supply chain, global value chain, Henri Poincaré, imperial preference, industrial cluster, industrial robot, intangible asset, invention of agriculture, invention of the telegraph, investor state dispute settlement, Isaac Newton, Islamic Golden Age, James Dyson, knowledge economy, knowledge worker, Lao Tzu, low skilled workers, market fragmentation, mass immigration, Metcalfe’s law, New Economic Geography, out of africa, paper trading, Paul Samuelson, Pax Mongolica, profit motive, rent-seeking, reshoring, Richard Florida, rising living standards, Robert Metcalfe, Second Machine Age, Simon Kuznets, Skype, Snapchat, Stephen Hawking, telepresence, telerobotics, The Wealth of Nations by Adam Smith, trade liberalization, trade route, Washington Consensus

Gains from Greater Scale Economies Even in today’s globalized world, local market size matters. For a whole host of reasons ranging from standards and regulations to consumer preferences, firms are frequently dominant in their home market while being marginal players in foreign markets. This very common situation is known as market fragmentation. As it turns out, market fragmentation reduces competition, raises prices, and keeps too many firms in business. As a result, nations with small markets tend to have too many firms that are too small to be globally competitive. This is especially a problem in developing nations. Having lots of firms is not the problem, of course.

Index A7/global South/developing nations: agreements and, 240; BITs and, 103, 104, 104f; communication and, 124; comparative advantage and, 149, 217–218; deindustrialization and, 55–57; exports and, 151; global GDP, share of, 1820-1990, 48f; ICT revolution and, 8; income, U.S. vs., 59; industrialization and, 59, 60f, 61, 62t, 213–218; know-how and, 140–141; market fragmentation and, 184–185; New Globalization policies and, 98–105, 217–218; Old Globalization (first unbundling) and, 78; policies and, 279; premature deindustrialization and, 134; sectors sequencing and, 268–269; summary, 18–19, 25–26; tariffs and, 72f, 100–105, 100f; trade with developed nations, 161.

See also IT (Information Technology); moving ideas comparative (competitive) advantage: A7/developing nations and, 149, 217–218; cities as factories and, 234–235; defined, 179–180; denationalized, 145–154; Dyson and, 136; exports and, 147–148; finer-resolution and, 257; global value chains and, 145–146, 217–218, 242, 273–274; high/low tech/wages and, 216; industrialization, 254; market fragmentation and, 184–185; measures of, 201; Meiji Japan example, 183–184f; migrations and, 138; national perspective and, 175–176; New Globalization (second unbundling) and, 147–148, 170–171, 175, 179–185, 221–222, 225–228, 231, 240, 257–262, 260f; offshoring and, 135, 168; Old/New Globalization compared, 166f–168, 171–172, 176, 179–185; policies and, 240; production networks and, 278; as regional/national concept, 266; Ricardo and, 125–129, 128, 138–139, 196; services and, 232; smuggling example of, 179–183; staged development strategy and, 259; stickiness and, 229; workers and, 168–169.


pages: 402 words: 110,972

Nerds on Wall Street: Math, Machines and Wired Markets by David J. Leinweber

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AI winter, algorithmic trading, asset allocation, banking crisis, barriers to entry, Big bang: deregulation of the City of London, butterfly effect, buttonwood tree, buy low sell high, capital asset pricing model, citizen journalism, collateralized debt obligation, corporate governance, Craig Reynolds: boids flock, creative destruction, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, Danny Hillis, demand response, disintermediation, distributed generation, diversification, diversified portfolio, Emanuel Derman, en.wikipedia.org, experimental economics, financial innovation, fixed income, Gordon Gekko, implied volatility, index arbitrage, index fund, information retrieval, intangible asset, Internet Archive, John Nash: game theory, Kenneth Arrow, Khan Academy, load shedding, Long Term Capital Management, Machine translation of "The spirit is willing, but the flesh is weak." to Russian and back, market fragmentation, market microstructure, Mars Rover, Metcalfe’s law, moral hazard, mutually assured destruction, Myron Scholes, natural language processing, negative equity, Network effects, optical character recognition, paper trading, passive investing, pez dispenser, phenotype, prediction markets, quantitative hedge fund, quantitative trading / quantitative finance, QWERTY keyboard, RAND corporation, random walk, Ray Kurzweil, Renaissance Technologies, Richard Stallman, risk tolerance, risk-adjusted returns, risk/return, Robert Metcalfe, Ronald Reagan, Rubik’s Cube, semantic web, Sharpe ratio, short selling, Silicon Valley, Small Order Execution System, smart grid, smart meter, social web, South Sea Bubble, statistical arbitrage, statistical model, Steve Jobs, Steven Levy, Tacoma Narrows Bridge, the scientific method, The Wisdom of Crowds, time value of money, too big to fail, transaction costs, Turing machine, Upton Sinclair, value at risk, Vernor Vinge, yield curve, Yogi Berra, your tax dollars at work

Larger firms, willing to risk some capital by incurring the risk of overbuying (or overselling), will be able to allow their clients to make use of more aggressive trading tactics. Multiple market fragments can be seen as providing a service to different classes of traders seeking liquidity, thus making markets overall more efficient, resilient, and robust—all good things. But in a complex, multiple-fragment market it is possible to shift from effective trading to gaming in a mix of different market structures. Some market fragments have price discovery, whereas others use prices derived from other fragments. When an algo finds that a price can be set in one fragment using a small order to create advantage for a larger trade in another fragment, that is an example of gaming the system.

The microstructure tactics based on these cost-minimizing trading models are also deployed in VWAP and similar applications. These anticipate volume, and try to participate throughout the day (or time period), optimizing to those targets. Models Aren’t Markets Even the most elegant models are abstractions of real markets. The real thing is a rapidly changing mélange of market fragments, continuous and call markets, ECNs, innovative matching systems, indications, and dark liquidity pools. Limit order books just aren’t what they used to be. In the days of eighths and of orders being modified by people, the inside quote * Market color can be defined as the mood and general sense among traders.

All rights reserved. incomprehensible blur. Rates of cancels and replacement of limit orders can be overlaid to turn the flood of data into useful information. Layers on the limit order book show grouped sizes at each price. Customized versions of the Visible Marketplace display can include multiple market fragments, but only one is shown in this example. As with all of these graphics, the dynamics and drill-down-to-details ability are content-rich aspects that don’t translate well to the printed page.24 If you are skillful and lucky, these market analytics will help you catch events before they are over.


pages: 423 words: 149,033

The fortune at the bottom of the pyramid by C. K. Prahalad

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barriers to entry, business process, call centre, cashless society, clean water, collective bargaining, corporate social responsibility, deskilling, disintermediation, farmers can use mobile phones to check market prices, financial intermediation, Hernando de Soto, hiring and firing, income inequality, information asymmetry, late fees, Mahatma Gandhi, market fragmentation, microcredit, new economy, profit motive, purchasing power parity, rent-seeking, shareholder value, The Fortune at the Bottom of the Pyramid, time value of money, transaction costs, wealth creators, working poor

Although the long-term retention is unknown, the immediate recollection of the advertisement’s message was about 90 percent. In the future, Annapurna’s advertising will be tracked more carefully. An advanced tracking process (ATP) is typically used four times per year on established brands and was to be used for the first time on Knorr-Annapurna salt after the 2003 launch. Market Fragmentation Annapurna team members all share valuable insights into the challenges the salt market presents to the brand. 188 The Fortune at the Bottom of the Pyramid Zarius Master, a regional sales manager for HLL, said: Everyone must consume some form of salt (therefore salt itself has 100 percent penetration); however, this makes the channels even more complex.

., 219 Acquired Immune Deficiency Syndrome (AIDS), 361 Adatiyas, 324–325 Advanced tracking process (ATP), 186 Aid agencies, 3, 9 Ala, 52 Alerta disease surveillance system (Peru), 364 Amancio, Celso, 126 Amul cooperative, 19, 31–32, 38, 46, 64, 108 Amway, 44 Andhra Pradesh e-governance story, 85–89 impediments to, 93–94 lessons from, 94–95 Annamalai, Kuttayan, 357, 385 Annapurna Salt, 171–206 advertising, 187 brand creation, 182 competitors, 179–181 Dandi Salt, 180 Tata Salt Ltd., 180 evolution of, 183–184 Hindustan Lever Research Center, 184 and HLRC, 184–185 innovation, 172 iodine deficiency disorder (IDD), 171 manufacturing and distribution, 189–192 market fragmentation, 187–188 market share, 188–189 market strategy, 187–189 message-driven beans, 187 product line and pricing, 186 retail price schemes, 192 salt target market, 185 transport, 190–192 innovations in, 191–192 Aravind Eye Care System, 29, 37–38, 242, 265–288 Aravind Center for Women, Children, and Community Health (ACWCCH), 283 Aravind Medical Research Foundation, 283 Aravind Postgraduate Institute of Ophthalmology, 284 Aurolab, 280–282 financial self-sustainability, 268–269 future of, 284–285 history of, 265–266 innovation, 265 LAICO, 282–283 mission, 267–268 organization of, 266–268 recruitment/training, 270–274 Rotary Aravind International Eye Bank, 283 Aravind Eye Hospital, 45, 266 capital intensity, 56 community outreach programs, 278–280 community-based rehabilitation project, 279 eye camps, 278–279 389 The Fortune at the Bottom of the Pyramid 390 Aravind Eye Hospital, continued eye screening of school children, 279 refraction camps, 279–280 composition of staff strength in, 267 eworld-class delivery system, development of, 53 Fellowship program, 271–272 IT kiosks for teleadvice, use of, 280 outpatient departments, 274–275 surgical wards, 276–278 workflow, 274–278 Aravind Medical Research Foundation, 283 Arbitrage restrictions, 329 Arogya (Health) Day, 199 Automatic Milk Collection System Units (AMCUS), 31 Automotive/two-wheeler manufacturers, and BOP customers, 57 Avon, 44, 108 B Balakrishnan, Dr., 281 Balasubramanian, A., 193 Balu, Rehka, 172–173 Banga, M.

., 44, 51, 221–222 Banga, Vindi, 193 Bank of Madura, 44, 72–73 history of, 298–301 ICICI Bank merger with, 301–302 lending, 74–75 and maturation of SHGs, 73 merger with ICICI, 74 Rural Development Initiative, 299–301 SHG model, 299–301 Bank-Netherlands Water Partnership, 217 Baron, Scott, 386 Barros, Allan, 125, 131 Bartira, 131 Behavior changes methodology, 226 Below-knee prosthetic products, 251–252 Ben & Jerry’s Ice Cream, 364 Bhagwan Mahaveer Viklang Sahayata Samiti, See BMVSS Big, 122 Bimbo bakery, 21, 116 Biometric authentication systems, 57 BMVSS, 244, 256–259 camp system, 261–262 collaboration with Indian Space Research Organization (ISRO), 263 new locations, 262 BOP (bottom of the pyramid): active engagement of private enterprises at, 5 Andhra Pradesh e-governance experiment, 85–89 impediments to, 93–94 lessons from, 94–95 building governance capabilities among the poor, 72–76 Center for Good Governance (CGG), 90–93 guiding principles, 91 and characteristics of market economy, 5 economic value creation at, 56 encouraging consumption and choice at, 10–12 engaging, 48–49 eSeva, 89–90 as global opportunity, 47–62 lack of money at, 10–12 learning from, 49 local growth opportunities, 50–51 learning to grow, 50–52 local innovations and global opportunity, 52–53 market development at, 2 philosophy for developing products and services for, 24–25 products/services for, 23–46 transaction governance capacity (TGC), 81–83 building, 83–85 components of, 84 degrees of, 81 BOP consumers: ability to adapt/resilience of, 108–109 and advanced technology, 15–16 cost disparities between the rich and, 11–12 and risk, 12 upgrade, 105–106 BOP markets: access to, 12–13 access to financial services, 29–30 brand-consciousness of, 13–14 business design criteria, 30 connectedness of, 14–15 delivery of products/services, 45–46 developed markets compared to, 34–37 and firms’ challenge of cost perspectives, 9 Index 391 large, 50 and multinational corporations (MNCs), 5 nature of, 10–16 as new growth opportunity for private sector, 6 NGOs as lead experimenters in, 32 and the private sector, 6 sustainable development, 33–34 twelve principles of innovation for, 25–26 Brazil: retail banks in, 125–126 stratification breakdown, 119 C Cadbury, 15 Cairncross, Sandy, 209 Canara Bank, 297 Capital intensity, and BOP markets, 55–57 Captain Cook, 198 Cargil, and salt market, 180 Carné (passbook), Casas Bahia, 126 Carrefour, 122 Casas Bahia, 14, 107, 115–146 appliance sales, 17 average finance term, 123 business model and positioning, 122–144 carné (passbook), 126 cash management, 130 competitive landscape, 121–122 consumer education process, 127–128 contracts, 141 credit analyst training, 128–130 cross-selling, 122 culture, 124–125 culture and philosophy, importance to, 118–119 customer experience, maximizing, 140 customers, 118 typical, 119–121 default rate at, 17 delivery drivers, 133 delivery process, 134 description of, 115 distribution, 132–133 distribution centers, 133 employee retention, focus on, 133 evaluation of prospective clients, 126–127 expansion, 145 finance, 125–144 furniture sales, 19, 131 default rate for, 127 future of, challenges, 144–145 history of, 115 human resources management, 142–144 identity cards, 107 infrastructure, investments in, 140 management style, 122–125 marketing, 135–137 opportunity, scope and size of, 119 preferred-client card, 137 product design, 131–132 production schedule, 132 products, 131 promotions, 136 purchasing power, 131 rejection of credit, 130, 141 retail landscape, 121–122 role of, 126–128 salespersons: compensation for, 143 training, 135 stores/storefronts, 134–135 supplier negotiation process, 132 technology, 137–140 example of, 138–139 future of, 142 history with IBM/Linux, 139–140 IT backbone, 141 ongoing IT projects, 141–142 revenues spent on, 140 television advertising, 136 third-party purchase at, 130 training, 128–130, 135 trust, 21 Casas, Cynthia, 388 CASHPOR, 313 Cataract surgery, and commitment to quality in BOP markets, 29 CEMEX, 17–18, 46, 106, 108, 147–168 Construmex, 164–168 business idea, evolution of, 164–167 business model, 165–166 Construmex Mexico, 167 distributors in Mexico, 167 Dolex USA, 167 international growth, 167 purpose of, 165 sales representatives, functions of, 165–167 description of, 115–116 history of, 147–148 392 CEMEX, continued initial market research (Guadalajara, Mexico), 152–153 innovation, 147 kiosks/construramas, 149 low-income population, converting into customers, 149 market eye-openers, 152–153 Mexican society, 150–152 housing, 152 savings, 150–151 women and entrepreneurism, 151–152 Mexico, 148 Patrimonio Hoy project, 40, 148–150 cell setup, 153–154 challenges, 163 costs, 159 customer enrollment, 154 distribution, 161 key lessons from, 164 marketing, 159–160 material distribution/delivery, 155–156 offices/cells, identification of, 153 operating model, 159–162 program design, 153–156 promotion, 161 revenues, 159 risk management, 161–162 savings-credit payment cycle, 154–155 socios/partners, 154 strategic importance of, 152–153 value to distributors, 158 value to promoters, 156–157 value to socios/partners, 157–158 value to suppliers, 158 products, 147 value analysis, 156–158 Center for Good Governance (CGG), 90–93, 99 guiding principles, 91 Centers for Disease Control (CDC), 39, 45, 54 Chandra, Ram, 34–37, 250, 262 Chandran, Sudha, 243 China, contract governance, 80 Choupal, defined, 335 Citicorp, 30 Civil society organizations, 3 Cohen, Ben, 364 Colgate-Palmolive, 198, 214, 216, 219 The Fortune at the Bottom of the Pyramid Communication barriers, breaking down, 102–105 Conagra, and salt market, 180 Confederation of Indian Industries (CII), 80 Connectedness, of BOP market, 14–15 Construmex, 164–168 business idea, evolution of, 164–167 business model, 165–166 Construmex Mexico, 167 distributors in Mexico, 167 Dolex USA, 167 international growth, 167 purpose of, 165 sales representatives, functions of, 165–167 Contracts: learning the sanctity of, 68–69 reducing inequities in, 69–72 Coordinators, SHGs, 302 Corporate social responsibility (CSR) initiatives, 6 Corruption, 95 as market mechanism for privilege access, 84 reducing, 77–98 Costs of managing, 58–61 Creating the capacity to consume, 16–19 “Three As”, 18 Cross-selling, Casas Bahia, 122 Curtis, Valerie, 209, 216 D Dadiseth, Keki, 231 Dandi Salt, 180 Data mining, 349 Data warehousing, 349 De Soto, Hernando, 78–84, 107 Delivery of products/services, 45–46 Department of Defense, 45 Deskilling work, 26 Developed markets, BOP solutions for, 53–54 Development, as social transformation, 99–112 Developmental assistance, assumptions at core of, 78 Dhall, Sharat, 193–194, 196, 198–199, 202 DHAN Foundation, 313 Dhawan, Vishal, 181, 184, 188 Index 393 Dialogue, access, risk benefits, and transparency (DART), 105, 109 Diarrheal disease, 208–209 behavior change, need for, 209–211 causes of, 208–209 handwashing as preventive measure, 209 public health issue in private realm, 210–211 Disease surveillance and response, ingredients of an effective system of, 362 Distribution, 43–44 Casas Bahia, 132–133 “Do-it-yourself” business focused on the BOP market, 17 Dolex USA, 167 Dominant logic: influence of, 9 of MNCs as it relates to BOP, 9 power of, 6–10 of public policy makers in India, changes in, 8 Donor nations, 3 Dorsiflexion, 248–249 Duarte, Gilberto, 132–133 Duggal, Bikram, 292 Dumas, Jean-Baptiste, 173 E E+Co, 45, 360 East India Company, 6 Economic pyramid, 4 E-governance, 87 Egypt, trapped resources of, 79 EID Parry Agriline, 43–44, 106, 288, 292 Elektra (Mexico), 14, 43, 57, 116 Entrepreneurism, in Mexican society, 151–152 Escort Hospital, 242 eSeva, 89–90, 107 list of services, 97–98 Extra, 122 F Fast-moving consumer goods (FMCG) industry (India), 66–68 Favela, defined, 120 Fernandes, Jose Roberto, 143 Financeiras, 125 Fingerprint recognition systems, 57 Foguel, Sami, 385 Food and Drug Administration (FDA), 45 Foreign direct investment (FDI), 64 Formal and informal market segments, comparison of, 151 Furniture sales: Casas Bahia, 19, 131 default rate for, 127 G Gillette, 214 Global Public-Private Partnership for Handwashing with Soap, 215–220, 235 Godowns, 189 Godrej Soaps, 215 Gopal Mishra, 192 Grameen Bank (Bangladesh), 64, 108, 299 default rate at, 21 development of microfinance in Bangladesh, 52–53 Grameen Phone (Bangladesh), 14 Graves’ disease, 174 Green, David, 280 H Habib’s, 65, 116 Handwashing, and diarrheal diseases, 208–209, 215–220 Hashimoto’s thyroiditis, 174 HDFC, 297 Hindustan Lever Limited (HLL), 172–173 See also HLL subsidiary, Unilever Hindustan Vanaspati Manufacturing Company, 181 HLL subsidiary, Unilever, 46, 63, 67–68, 169–170 ability to reach the masses, 212–213 Annapurna salt: advertising, 187 manufacturing and distribution, 189–192 market fragmentation, 187–188 market share, 188–189 market strategy, 187–189 message-driven beans, 187 product line and pricing, 186 394 HLL subsidiary, continued retail price schemes, 192 salt target market, 185 transport, 190–192 company profile, 181–185 corporate vision, 181 entry into branded staples, 181–182 financial performance, 213 gain from marketing public health messages about soap, 229–231 Gandhidam factory, 189–190 history of, 211 increasing market sales, methods for, 231–234 developing expertise to sell health, 234–235 impact on behavior change/soap sales, 234 scalability, 231–234 as largest Indian soap manufacturer, 211–212 as a nodal form, 68 Popular Foods division, 181 production costs, 190 Project Shakti at Hindustan Lever Ltd.


pages: 318 words: 87,570

Broken Markets: How High Frequency Trading and Predatory Practices on Wall Street Are Destroying Investor Confidence and Your Portfolio by Sal Arnuk, Joseph Saluzzi

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algorithmic trading, automated trading system, Bernie Madoff, buttonwood tree, commoditize, computerized trading, corporate governance, cuban missile crisis, financial innovation, Flash crash, Gordon Gekko, High speed trading, latency arbitrage, locking in a profit, Mark Zuckerberg, market fragmentation, Ponzi scheme, price discovery process, price mechanism, price stability, Sergey Aleynikov, Sharpe ratio, short selling, Small Order Execution System, statistical arbitrage, transaction costs, two-sided market, zero-sum game

In December 2010, SEC Chair Mary Schapiro testified before Congress that the Commission was looking into “abusive colocation and data latency arbitrage activity in potential violation of Regulation NMS.”13 At the close of 2011, however, there had been no action on this subject, and the SEC’s own 2009 Dark Pool Proposal is still sitting in limbo. Today we have more than 40 pools adding to market fragmentation, where the majority of them feed/benefit proprietary trading as their predominant intention. Although institutions initially made a conscious choice to participate in dark pools as a way to limit market impact, today they mostly participate by default because the algorithms they use to divide up their orders and execute in small pieces throughout the day automatically pass though most of them.

Although the brokerage firm tells its institutional customers that its SOR is choosing destinations in a “smart” way—ostensibly to get each child order “best execution”—SORs are more typically optimized to benefit the cost structure and prop trading interests of the brokers. According to a study conducted by Woodbine Associates, a capital markets research and advisory firm, suboptimal order routing decisions cost institutional investors as much as $4.5 billion per year.2 We frequently appear at industry conferences to speak on topics ranging from market fragmentation to conflicts of interest built into our market structure. In November 2011, Sal spoke at one such panel in New York City on the topic of SOR. Buy Side Technology, an industry publication, reported on the event in a story titled “Smart Order Routing: Dancing with the Devil.”3 The article’s author, Jake Thomases, recounted the back and forth between Sal and fellow panelist, Val Shlivko, an executive at Nomura Securities.


pages: 168 words: 50,647

The End of Jobs: Money, Meaning and Freedom Without the 9-To-5 by Taylor Pearson

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Airbnb, barriers to entry, Black Swan, call centre, cloud computing, commoditize, creative destruction, David Heinemeier Hansson, Elon Musk, en.wikipedia.org, Frederick Winslow Taylor, future of work, Google Hangouts, Kevin Kelly, Kickstarter, knowledge economy, knowledge worker, loss aversion, low skilled workers, Lyft, Marc Andreessen, Mark Zuckerberg, market fragmentation, means of production, Oculus Rift, passive income, passive investing, Peter Thiel, remote working, Ronald Reagan: Tear down this wall, sharing economy, side project, Silicon Valley, Skype, software as a service, software is eating the world, Startup school, Steve Jobs, Steve Wozniak, Stewart Brand, telemarketer, Thomas Malthus, Uber and Lyft, unpaid internship, Watson beat the top human players on Jeopardy!, web application, Whole Earth Catalog

Entrepreneurship expands your power to design your life. You are a part of the first generation that has radical access to the tools of production. Rather than choosing from a set of options, you can design our own. The internet and technology have revealed the power of the Long Tail. As major markets fragment into smaller and smaller markets, there’s more opportunities. The democratization of production and distribution means it’s easier than ever to take advantage them and design your own reality. Social scripts like stair stepping and apprenticeships make it possible to invest in entrepreneurship and become more entrepreneurial have been created that didn’t exist a decade ago.


pages: 280 words: 73,420

Crapshoot Investing: How Tech-Savvy Traders and Clueless Regulators Turned the Stock Market Into a Casino by Jim McTague

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algorithmic trading, automated trading system, Bernie Madoff, Bernie Sanders, Bretton Woods, buttonwood tree, computerized trading, corporate raider, creative destruction, credit crunch, Credit Default Swap, financial innovation, fixed income, Flash crash, High speed trading, housing crisis, index arbitrage, locking in a profit, Long Term Capital Management, margin call, market bubble, market fragmentation, market fundamentalism, Myron Scholes, naked short selling, pattern recognition, Ponzi scheme, quantitative trading / quantitative finance, Renaissance Technologies, Ronald Reagan, Sergey Aleynikov, short selling, Small Order Execution System, statistical arbitrage, technology bubble, transaction costs, Vanguard fund, Y2K

The SEC’s approach to shaping the market would be heavy handed, with layer upon layer of complicating rules. Had Moss lived to see it, he would have regretted giving the SEC such a free hand. The other goof was that the act granted entirely too many concessions to the NYSE, codifying a system of specialists in a way that would result in market fragmentation, not the intended, integrated national market system. “The dealer problem has been aggravated by the fact that many specialists have neither the capital nor the inclination to handle effectively the large orders that come in from institutions, and thus this function has gravitated to large, well-capitalized firms who combined the broker and the dealer function by finding the other side for these orders to the extent possible, positioning the balance if necessary, noted SEC Commissioner Philip A.


pages: 306 words: 79,537

Prisoners of Geography: Ten Maps That Explain Everything About the World by Tim Marshall

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9 dash line, Admiral Zheng, anti-communist, Berlin Wall, British Empire, California gold rush, colonial rule, cuban missile crisis, Deng Xiaoping, drone strike, European colonialism, facts on the ground, failed state, Fall of the Berlin Wall, Hans Island, LNG terminal, market fragmentation, megacity, Mercator projection distort size, especially Greenland and Africa, Mikhail Gorbachev, Monroe Doctrine, oil shale / tar sands, Scramble for Africa, South China Sea, trade route, transcontinental railway, Transnistria, UNCLOS, UNCLOS, zero-sum game

Germans know instinctively that if the Union fragments, the old fears of Germany will reappear, especially as it is now by far the most populous and wealthy European nation, with 80 million inhabitants and the world’s fourth-biggest economy. A failed Union would also harm Germany economically: the world’s third-largest exporter of goods does not want to see its closest market fragment into protectionism. This is why in the summer of 2015, after the fractious debate over Greece, Germany led the discussion about whether the eurozone countries should form a genuine fiscal union. This will require a level of pooling of sovereignty hitherto unseen in Europe, with a shared budget between member states.


pages: 524 words: 143,993

The Shifts and the Shocks: What We've Learned--And Have Still to Learn--From the Financial Crisis by Martin Wolf

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air freight, anti-communist, Asian financial crisis, asset allocation, asset-backed security, balance sheet recession, bank run, banking crisis, banks create money, Basel III, Ben Bernanke: helicopter money, Berlin Wall, Black Swan, bonus culture, break the buck, Bretton Woods, call centre, capital asset pricing model, capital controls, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, central bank independence, collateralized debt obligation, corporate governance, creative destruction, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, currency manipulation / currency intervention, currency peg, debt deflation, deglobalization, Deng Xiaoping, diversification, double entry bookkeeping, en.wikipedia.org, Erik Brynjolfsson, Eugene Fama: efficient market hypothesis, eurozone crisis, Fall of the Berlin Wall, fiat currency, financial deregulation, financial innovation, financial repression, floating exchange rates, forward guidance, Fractional reserve banking, full employment, global rebalancing, global reserve currency, Growth in a Time of Debt, Hyman Minsky, income inequality, inflation targeting, information asymmetry, invisible hand, Joseph Schumpeter, Kenneth Rogoff, labour market flexibility, labour mobility, light touch regulation, liquidationism / Banker’s doctrine / the Treasury view, liquidity trap, Long Term Capital Management, mandatory minimum, margin call, market bubble, market clearing, market fragmentation, Martin Wolf, Mexican peso crisis / tequila crisis, money market fund, moral hazard, mortgage debt, negative equity, new economy, North Sea oil, Northern Rock, open economy, paradox of thrift, Paul Samuelson, price stability, private sector deleveraging, purchasing power parity, pushing on a string, quantitative easing, Real Time Gross Settlement, regulatory arbitrage, reserve currency, Richard Feynman, Richard Feynman, risk-adjusted returns, risk/return, road to serfdom, Robert Gordon, Robert Shiller, Robert Shiller, Ronald Reagan, savings glut, Second Machine Age, secular stagnation, shareholder value, short selling, sovereign wealth fund, special drawing rights, The Chicago School, The Great Moderation, The Market for Lemons, the market place, The Myth of the Rational Market, the payments system, The Wealth of Nations by Adam Smith, too big to fail, Tyler Cowen: Great Stagnation, very high income, winner-take-all economy, zero-sum game

This is ‘debt deflation’ – a condition in which debtors are forced to save an ever higher share of their incomes in order to pay down debt, because the latter’s real value is rising over time. The more countries struggle to restore competitiveness and the weaker their growth, the worse the debt trap into which they will fall. As the IMF’s 2013 report on the Eurozone underlines, ‘Persistent financial market fragmentation, weak bank balance sheets, low demand, and creeping uncertainty, as well as structural weaknesses, all reinforce each other and contribute to the contraction of real activity.’34 Not least, a financial crisis starves businesses, on which growth depends, of the credit they need to finance investment.


pages: 868 words: 147,152

How Asia Works by Joe Studwell

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affirmative action, anti-communist, Asian financial crisis, bank run, banking crisis, barriers to entry, borderless world, Bretton Woods, British Empire, call centre, capital controls, central bank independence, collective bargaining, crony capitalism, cross-subsidies, currency manipulation / currency intervention, David Ricardo: comparative advantage, deindustrialization, demographic dividend, Deng Xiaoping, failed state, financial deregulation, financial repression, Gini coefficient, glass ceiling, income inequality, income per capita, industrial robot, Joseph Schumpeter, Kenneth Arrow, land reform, land tenure, large denomination, liberal capitalism, market fragmentation, non-tariff barriers, offshore financial centre, oil shock, open economy, passive investing, purchasing power parity, rent control, rent-seeking, Right to Buy, Ronald Coase, South China Sea, The Wealth of Nations by Adam Smith, urban sprawl, Washington Consensus, working-age population

China appears, in the aggregate, to be doing better with its state-owned enterprises. Out of the country’s history of socialist industrial planning, and Zhu Rongji’s 1990s rationalisation programme, there has developed a roster of substantial mid-stream businesses that are becoming increasingly globally competitive. These public firms are protected from undue market fragmentation by high capital barriers to entry, yet there are enough of them in each industrial segment to make for fierce competition.29 They indicate that export discipline, and domestic competition combined with the steady culling of losers, are more important than ownership in determining industrial development success.


pages: 777 words: 186,993

Imagining India by Nandan Nilekani

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affirmative action, Airbus A320, BRICs, British Empire, business process, business process outsourcing, call centre, clean water, colonial rule, corporate governance, cuban missile crisis, deindustrialization, demographic dividend, demographic transition, Deng Xiaoping, digital map, distributed generation, farmers can use mobile phones to check market prices, full employment, ghettoisation, glass ceiling, global supply chain, Hernando de Soto, income inequality, informal economy, Intergovernmental Panel on Climate Change (IPCC), joint-stock company, knowledge economy, labour market flexibility, land reform, light touch regulation, LNG terminal, load shedding, Mahatma Gandhi, market fragmentation, mass immigration, Mikhail Gorbachev, Network effects, new economy, New Urbanism, open economy, Parag Khanna, pension reform, Potemkin village, price mechanism, race to the bottom, rent control, rolodex, Ronald Reagan, school vouchers, Silicon Valley, smart grid, special economic zone, The Wealth of Nations by Adam Smith, Thomas L Friedman, Thomas Malthus, transaction costs, trickle-down economics, unemployed young men, upwardly mobile, urban planning, urban renewal, women in the workforce, working poor, working-age population

The government also made a variety of concessions to local powers and players, which impoverished it and fragmented markets even further—for instance, as the Congress found widespread support among the agrarian elite and the midsize and local landowners, the government refrained from taxing these groups at a time when agriculture contributed to 50 percent of India’s economy.7 The feudal systems also kept these markets fragmented—landowners maintained their power over local communities and small farmers, which hindered rural areas from getting information from and access to outside markets. Demands to impose new limitations on market links became a lobbying cause—pesticide distributors, for example, could successfully plead to the government to prevent farmers from directly contracting purchases with manufacturers.


pages: 1,104 words: 302,176

The Rise and Fall of American Growth: The U.S. Standard of Living Since the Civil War (The Princeton Economic History of the Western World) by Robert J. Gordon

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3D printing, Affordable Care Act / Obamacare, airline deregulation, airport security, Apple II, barriers to entry, big-box store, blue-collar work, Capital in the Twenty-First Century by Thomas Piketty, clean water, collective bargaining, computer age, creative destruction, deindustrialization, Detroit bankruptcy, discovery of penicillin, Donner party, Downton Abbey, Edward Glaeser, en.wikipedia.org, Erik Brynjolfsson, everywhere but in the productivity statistics, feminist movement, financial innovation, full employment, George Akerlof, germ theory of disease, glass ceiling, high net worth, housing crisis, immigration reform, impulse control, income inequality, income per capita, indoor plumbing, industrial robot, inflight wifi, interchangeable parts, invention of agriculture, invention of air conditioning, invention of the telegraph, invention of the telephone, inventory management, James Watt: steam engine, Jeff Bezos, jitney, job automation, John Markoff, John Maynard Keynes: Economic Possibilities for our Grandchildren, labor-force participation, Loma Prieta earthquake, Louis Daguerre, Louis Pasteur, low skilled workers, manufacturing employment, Mark Zuckerberg, market fragmentation, Mason jar, mass immigration, mass incarceration, McMansion, Menlo Park, minimum wage unemployment, mortgage debt, mortgage tax deduction, new economy, Norbert Wiener, obamacare, occupational segregation, oil shale / tar sands, oil shock, payday loans, Peter Thiel, pink-collar, Productivity paradox, Ralph Nader, Ralph Waldo Emerson, refrigerator car, rent control, Robert X Cringely, Ronald Coase, school choice, Second Machine Age, secular stagnation, Skype, stem cell, Steve Jobs, Steve Wozniak, Steven Pinker, The Market for Lemons, Thomas Malthus, total factor productivity, transaction costs, transcontinental railway, traveling salesman, Triangle Shirtwaist Factory, Unsafe at Any Speed, Upton Sinclair, upwardly mobile, urban decay, urban planning, urban sprawl, washing machines reduced drudgery, Washington Consensus, Watson beat the top human players on Jeopardy!, We wanted flying cars, instead we got 140 characters, working poor, working-age population, Works Progress Administration, yellow journalism, yield management

Female tastes shifted from dresses to separate tops and bottoms, and women revolted from the ups and downs of hemlines by shifting from skirts to pants and pantsuits. Likewise, men wore formal suits less often and separate jackets and trousers more often. Hats for women gradually disappeared, as they had for men a decade or two earlier. The market fragmented with clothing that differed by age group and lifestyle, but the continued trend toward casual clothing created a more uniform look for men based on the universality of khaki and blue denim pants. Men began to switch from shirts with buttons to polo shirts and turtlenecks. For women, the casual trend eroded the differences between daytime and evening wear, and as more women joined the labor force, they favored clothing that they could wear to work and then out at night without changing.