The New Electronic World of Trading

As most people already know the New York Stock Exchange is finally taking the plunge and merging itself with a fully electronic exchange. The New York has had an electronic component for many years. But they were not willing to let go of the lucrative specialist system until today, in which the other competitive electronic exchanges have forced their hand.

Surprisingly the system of specialist has their niche in the marketplace but not for most big board traded stocks where a large orderly market already exists. The market for specialists should be established for smaller less liquid stock offering of smaller less capitalized corporations. This could lead to a less volatile and less manipulated market for these lower cap companies. The exchange specialist can be electronic of course as opposed to one that is physical. Members would have to have minimum capitalization and adhere to a strict set of purchase and sale rules similar to that now held by stock specialist on exchanges like the New York etc. This in my opinion would attract larger capitalization greater liquidity, and reduced volatility to these lower cap companies stock. This type of regulated exchange would also eliminate much of the manipulation that has always scared away many investors from investing in this capital hungry market segment.

The market could in reality become an attractive tool to this capital starved arena. Venture capitalist tends to be limited in their scope of investment after the bust of that last go around. They are somewhat risk adverse which further limits the availability of cash to fund many realistic new enterprises.