This post first appeared on FloatingPath
According to Bloomberg, conference calls among exchanges, brokers, mutual funds, and regulators took place yesterday to discuss the plan. Although a representative of Rosenblatt Securities declined to comment on yesterday’s discussion specifically, he did discuss the overall push for widening spreads.
Voss Capital is betting on a housing market boom
The Voss Value Fund was up 4.09% net for the second quarter, while the Voss Value Offshore Fund was up 3.93%. The Russell 2000 returned 25.42%, the Russell 2000 Value returned 18.24%, and the S&P 500 gained 20.54%. In July, the funds did much better with a return of 15.25% for the Voss Value Fund Read More
“There are a couple of groups that are really driving this and want it to happen, and it seems like everybody else may not be convinced it’ll make a huge difference but feels it should be tried because it probably won’t hurt anything.”
Thanks to a provision of the JOBS Act, the SEC has been required to study the effects of penny pricing and subsequently mandate bid/ask spreads of up to 10 cents for smaller companies if it felt compelled to do so.
As we discussed prior, the intentions of such a program are inherently benevolent, but the specific suggestions put forth by Citigroup Inc (NYSE:C) in October seem to be a bad plan for creating liquidity.
In doing this, the proposal would allow a broker’s internalizers to execute trades inside displayed quotes. This is essentially the “price improvement” and “liquidity provisions” that HFT firms continue to falsely claim they provide.