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The pricing cloud…

John Constable, Cloud Study       John Constable, Cloud Study
There are, very crudely, three categories of price information (quotation and trade data) in the financial markets: >>> Proprietary pricing which is generated by models and maintained inside an organization; >>> Broker-dealers develop OTC bid/offers which they privately distribute to trading partners (often this is tiered pricing); >>> Price information actively disseminated to the public (exchange prices, TRACE); Markets operate with all three types of information... proprietary, privately distributed and public... asset classes which operate with public information have the most liquidity, smallest transaction costs and narrowest bid/offer spreads (equities, corporate bonds). I'll be making the argument over and over that we need more active dissemination of price information... for this lies at the heart of the issue of fairness for retail investors... Expanding TRACE to include all fixed income products will be a good beginning...

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