3c hapter - Index of
3c hapter - Index of
3c hapter - Index of
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Back to the Future 219<br />
corners <strong>of</strong> the industry, suggesting a growing sense that our public<br />
markets are failing us.<br />
Former SEC commissioner Steve Wallman, now founder and<br />
CEO <strong>of</strong> online brokerage fi rm FOLIOfn, believes that investors<br />
could benefi t from a safe- haven market. “The way the marketplace<br />
has evolved, not just with respect to capital raising but with respect<br />
to the ability for individual investors to invest fairly, has not been<br />
good. There is fast arising the question <strong>of</strong> whether there needs to<br />
be two separate markets,” he says, one where pr<strong>of</strong>essional traders<br />
can ply their high- frequency and algorithmic trading strategies,<br />
and one for those seeking to raise capital or invest for the long<br />
term. “A scenario that may need to be considered, therefore, is<br />
one in which dark pools and high- frequency trading exist as they<br />
wish, but are kept away from the investing, as opposed to trading,<br />
markets. That way, the public investing markets can be deployed<br />
once again to do what they do best: provide a means for investing<br />
where participants are engaged in reasonable price discovery and<br />
issuers can raise capital, all for the long term.”<br />
Meanwhile, David Weild and Edward Kim <strong>of</strong> Grant Thornton<br />
have proposed the creation <strong>of</strong> an alternative exchange that companies<br />
could choose to list on. This “alternative market segment,”<br />
as they call it, would be open to all investors, and subject to all<br />
<strong>of</strong> the usual SEC regulations. Here’s where they get really radical:<br />
While computers would display prices, all orders would be placed<br />
using that anachronistic communications device, the telephone.<br />
Weild and Kim envision recreating the ecosystem <strong>of</strong> old, with<br />
market makers, specialists, and brokers who would earn higher<br />
commissions and spreads in return for providing traditional services<br />
like market support, sales, and research. This, they believe,<br />
would attract small- cap companies that are typically ignored in<br />
today’s markets.<br />
It seems the way forward for our capital markets might be<br />
rooted in the past.