You Gotta Know Your Equity Market Structure

Category: Finance.

In today s electronic trading environment, traders and investors alike react to market structure.

Quantitative trading is popular and successful because it manages risk through mathematical analysis of market structure. In general terms, Market Structure means the number, kind and distribution, size of participants in a market. Results? On it goes. Fundamental and quantitative investors alike manage capital with programs, structured products, algorithms, crossing platforms& #133. Here s is what we are observing: the act of investing is increasingly the domain of private equity, while the practice of trading in pursuit of alpha( divergences from norms) and beta( the degree of divergence) is the prevalent form of" investing" today in the equity markets. Trades on what remains of the floor of the NYSE are driven by mathematics and execute in 200 milliseconds or less.

Consider: The Nasdaq and the NYSE, having absorbed Archipelago and Instinet( and BRUT) , are essentially ECNs. High- frequency firms like Octeg( the equity trading arm of Getco LLC) , Renaissance Technologies, Millenco, Citadel Derivatives( hedge fund Millennium Capital) and BATS Trading move billions of shares per month& #150. Also, now the world, Goldman Sachs s largest hedge fund, grew revenues 52% in 2006 to$ 38 billion and had an all- time investment- bank high net income of$ 5 billion( after paying out$ 15 billion in bonuses) principally on the strength of trading operations. Often more than the global market s biggest equity program trader, Morgan Stanley. And Fidelity is among the largest algorithmic traders. So IROs, if you re still practicing investor relations the same old way, you re ill- equipped for Reg NMS markets. Any wonder why?

You gotta know your equity market structure. If you conduct your IR program& #150. If you don t, you re the only participant in your own market who doesn t. Messaging, shareholder- base goals, measurement, outreach& #150. Risks? Without considering market structure, you re neglecting a key facet of what drives your external target market s decisions.

Inaccurate answers about why your equity appreciates or declines. Ineffective measurement of your Investor Relations program. Wasted time on outreach and messages inappropriate for your market structure. Net effect: Reduced value at the management table, less functional relevance. "But we focus on the business and let the stock take care of itself. " Okay. That s why they re pumping literally trillions into private equity. Investors will always follow the cash& #133. So go private.

Then adapt by learning the new key value drivers embodied in market structure. Or accept that the short- term nature of today s equity markets is at odds with altruism. IROs, The Street isn t what it used to be. And your management team& #150. If you& #150. Want to navigate today s equity market with calm confidence, you must cozy up to market structure and make it your friend.

Read more...

So, How Are These Credit Scores Calculated - Finance Articles:

So, how are these credit scores calculated?

Without Fulfilling These Requirements, The Contract Is Good For Nothing - Finance Articles:

For those of you who have been pondering upon the thought of buying a property in the Dominican Republic, there are a few tips that could bring this business on the road of good winnings.

Military Credit Cards - Rosella Spiva's Finance blog:

Partnered With Hundreds. There is a style for every person and for every degree of credit worthiness.