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SEC approves Texas Stock Exchange, first new US integrated exchange in decades

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Re: SEC approves Texas Stock Exchange, first new US integrated exchange in decades

#241

Post by grafmax »

jedberg wrote: post #235
usefulcat wrote: post #219

Earlier quoted context omitted.

> Perhaps Texas could use a different trading model that doesn't require ultra high speed trading. What would that look like? Periodic auctions? Certainly it could be done, I'm just trying to understand what problem might be solved, and whether the solution would be effective. For example, even with the opening and closing auctions we have today, there can be an advantage to getting your order accepted right before t…

You take bids continuously but publish the bids and "resolve" the auction every X seconds, where X is between 5 and 10. Then there is no speed advantage as long as you can get your bid in within 5 seconds.

There is still a speed advantage. You can look at correlated markets for example and trade at the end of the time window with 5 seconds more info than anyone trading at the start of the time window.

Re: SEC approves Texas Stock Exchange, first new US integrated exchange in decades

#242

Post by larsiusprime »

tomrod wrote: post #223
CGMthrowaway wrote: post #213

Earlier quoted context omitted.

So in other words, healthy competition, and may the best man win. Contrary to many comments this is more than political reaction/posturing. The state of Texas is the world's 8th largest GDP and a diverse one, with no one sector exceeding 9%. Texas is well-positioned relative to NYC for attention around AI, as it is not geographically constrained and has an energy advantage. There is financial credibility built in as…

All true. Texas worker environment is not great though. Folks typically list income tax as an advantage but property and sales taxes more than make up the difference. Also, govt admin is fairly hostile to any infrastructure expansion, preferring to let the local car dealers buy new town charters with no infrastructure. Environmental regs are not well managed generally. Anyhow, not the worst state, not the best. Prett…

Higher property taxes and low income taxes is preferable actually, it keeps the housing market from getting massively distorted.

Re: SEC approves Texas Stock Exchange, first new US integrated exchange in decades

#243

Post by jedberg »

grafmax wrote: post #241
jedberg wrote: post #235

Earlier quoted context omitted.

You take bids continuously but publish the bids and "resolve" the auction every X seconds, where X is between 5 and 10. Then there is no speed advantage as long as you can get your bid in within 5 seconds.

There is still a speed advantage. You can look at correlated markets for example and trade at the end of the time window with 5 seconds more info than anyone trading at the start of the time window.

Except with the randomness you won't know if the window is 5 seconds or 10 or anything in between. So sure you could send in your bit at 4.99 seconds but it won't matter if you're a few microseconds off.

Re: SEC approves Texas Stock Exchange, first new US integrated exchange in decades

#244

Post by ajmurmann »

usefulcat wrote: post #219
robocat wrote: post #130

Earlier quoted context omitted.

> I would assume TXSE would want quick access to that order flow Perhaps Texas could use a different trading model that doesn't require ultra high speed trading. Matt Levine often mulls the idea of a system with a trading window that doesn't let the fastest connection to the order book win. Perhaps an order book that works at human speeds so humans can trade too (I can think of a few ways to do it - but would need mo…

> Perhaps Texas could use a different trading model that doesn't require ultra high speed trading. What would that look like? Periodic auctions? Certainly it could be done, I'm just trying to understand what problem might be solved, and whether the solution would be effective. For example, even with the opening and closing auctions we have today, there can be an advantage to getting your order accepted right before t…

Eric Ries first started talking about a Long-Term Stock Exchange, he suggested long (potentially multi-year) lock-up periods. The LTSE he actually implemented doesn't have that. I speculate that this was a compromised because they are allowing dual listings which helps them gain market share but also would undermine the entire concept of very long lock-ups.

I'd love to see a stock market actually do this.

Re: SEC approves Texas Stock Exchange, first new US integrated exchange in decades

#245

Post by dreamcompiler »

tonyhart7 wrote: post #209
dreamcompiler wrote: post #176

Earlier quoted context omitted.

Texas' grid was very reliable when I was growing up there. Since deregulation however, it's no longer reliable. It used to be mandated that grid facilities were overbuilt to have some headroom for emergencies. That's no longer true. Now, Texas utilities only maintain the minimum infrastructure needed for normal operations and they have no cushion if something goes wrong. Any CEO of a Texas utility that spends money b…

in many country, electric(or energy) is state company that way any infrastructure that related to serve the citizen well being isn't exploited for profit why US can't do this????

The US did do this for most of the 20th century. Or at least something close to this: Many utilities were private companies but they were regulated monopolies. The state allowed them to be monopolies in exchange for tight state control.

In the 1990s this started to change. The idea was that the different utilities could compete for customers, and thus they wouldn't be monopolies any more and thus market forces would take the place of government regulation.

Of course this has failed spectacularly. Deregulation brought us the Enron disaster and the 2021 Texas grid crisis, among others. But since corporations control the US government now, there's no chance regulation will be brought back.

Re: SEC approves Texas Stock Exchange, first new US integrated exchange in decades

#246

Post by [deleted] »

larsiusprime wrote: post #242
tomrod wrote: post #223

Earlier quoted context omitted.

All true. Texas worker environment is not great though. Folks typically list income tax as an advantage but property and sales taxes more than make up the difference. Also, govt admin is fairly hostile to any infrastructure expansion, preferring to let the local car dealers buy new town charters with no infrastructure. Environmental regs are not well managed generally. Anyhow, not the worst state, not the best. Prett…

Higher property taxes and low income taxes is preferable actually, it keeps the housing market from getting massively distorted.

[deleted]

Re: SEC approves Texas Stock Exchange, first new US integrated exchange in decades

#247

Post by bigthymer »

immibis wrote: post #189
javier123454321 wrote: post #89

Pardon 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.

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 spre…

> there's no reason to trade them anywhere else than the one place that has the highest volume and lowest spreads for that stock.

Norbert's Gambit is a good reason. It is potentially the cheapest way to effectively do a currency exchange.

[1] - https://www.finiki.org/wiki/Norbert%27s_gambit

Re: SEC approves Texas Stock Exchange, first new US integrated exchange in decades

#248

Post by kasey_junk »

peterbonney wrote: post #230
kasey_junk wrote: post #149

Earlier quoted context omitted.

IEX tried this to much fanfare. Turns out most participants don’t particularly care about that as a motivating factor.

I'd say IEX has done remarkably well - it's not likely to displace NASDAQ or NYSE but it has solidified its place as the #3 US exchange by any reasonable measure. If TXSE achieves comparable market share I'd call that a wild success. You're not wrong to say that most participants don't care about what IEX offers, but enough do to make a meaningful dent in trading volume.

It’s definitely not 3rd place. That’s cboe and it’s not close. It’s hanging around with ~2% of the trade volume.

https://www.cboe.com/us/equities/market_statistics/

I don’t know if that is “remarkably well” but it certainly isn’t some market paradigm shift.

If you were to tell me in 10 years the Texas exchange would have 2% of the market I’d believe you. But I’d still not be terribly impressed.

Re: SEC approves Texas Stock Exchange, first new US integrated exchange in decades

#249

Post by ohples »

CGMthrowaway wrote: post #240
ohples wrote: post #231

Earlier quoted context omitted.

> preferring to let the local car dealers buy new town charters with no infrastructure. I'm curious what this is referring to.

Probably talking about Starbase (elon musk).

Ahh don't know why I missed that one.

Re: SEC approves Texas Stock Exchange, first new US integrated exchange in decades

#250

Post by sgc »

SkipperCat wrote: post #13

The Miami stock exchange (MIAX) has their matching engines colocated in Equinix's NY4 data center in Secaucus NJ, much like many other exchanges. I would not be surprised if TXSE does the same. Many trading firms already have their trading engines in that data center and I would assume TXSE would want quick access to that order flow and this might be easier if they are in NY4. Of course, they may want to have their c…

I would rather see an exchange that requires buyers to hold their shares for at least x days or weeks, and slow everything way down so that people are actually forced to make decisions based on fundamentals rather than trading based on jitters in market movement. Then the datacenter location is almost irrelevant.
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