alt Hacker NewsPardon my ignorance but can anyone can help me figure out what does it mean to have a new stock exchange? Dont exchanges sell the same stocks? Is it just a way to earn some fees by capturing some of the trades in their platform?
I'll obviously google it now but I'd appreciate some insight.
Replies
> Dont exchanges sell the same stocks?
No. Each company chooses what exchange their stock is sold on. Sometimes (often for large companies) you are on more then one exchange, but never all of them.
Nothings stops an exchange (laws may not allow this but remember exchanges are in many countries and only subject to the laws of their country) from handling stock that the company doesn't want on them, but the value of an exchange is other people are looking there when they want to buy and sell and so it would be hard to get enough traders if the company doesn't want to list with you.
Not all exchanges handle stocks. There are other things traded as well.
In this case it's a marketing ploy for the state of Texas and also a way for Schwab, citadel, blackrock and fortress to press their finger on the balance of power which is far tilted towards the ICE.
Also note Schwab is headquartered in Texas and they account for a significant percentage of trading in the US on a daily basis.
Mostly yes, but a more optimistic (if naive) perspective is that the exchange wants to bring something new and valuable to the market. There are tons of little rules on exchanges about how stocks trade, and these can affect the amount of stocks and prices of stocks that different investors are able to get. These rules (often called microstructure) are partially determined by law, but there's differentiation between exchanges, and so one of the things a new exchange can do is introduce different rules that might make the market more "fair" depending how you define that.
Enron 2.0 Bigger and Unregulated!
Surprisingly, no - moving a stock from one exchange to another is a lot harder than selling on one and buying on another (and slower, and more costly for small quantities), so stocks are surprisingly immobile. Only if you really had to, would you move them. And most stocks have one particular home exchange and there's no reason to trade them anywhere else than the one place that has the highest volume and lowest spreads for that stock.
Each exchange can make its own rules for what it will list and how it will trade (within the broader SEC regulations).
So yes it’s just a way to capture fees from listers who like your exchange better as the primary listing exchange and from market participants that must be in every exchange (latency sensitive HFT).
None of the many exchanges that have started have made a dent in the existing duopoly for real share listings that Nasdaq/nyse have. But some exchanges have made good business off of other products like etfs.