Tuesday, January 24, 2017

Trade technology, the new era

Business Insider: Bond trading platform Tradeweb is pushing a type of trading known as RFQ, or request-for-quote trading, for US ETFs. Tradeweb launched a RFQ platform for US ETFs in the first quarter of 2016, and has seen quarterly volume increase steadily since then. The platform has now traded $24 billion in notional volume, with half of that in the fourth quarter. 

We have two themes, a relatively fair trading pit and exchange traded funds. 

The second issue is about ETFs causing incoherent aggregation in the stock market. The financial markets themselves are supposed to be 'flea market', no supply lines. Indexing adds the delusion of a stock market supply line. Then, in moments like this, when the conditional probabilities are aligned, the delusion suddenly evaporates.

The first issue is about the new sandbox technology, and Tradeweb is a huge hit. They may even beat Redneck Systems, especially if the get the price engine concept.

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