I don’t see how it’s a benefit to capitalism or companies or, well, anyone, really, to allow people to make thousands of trades a day for minute profits on each.

My gut feeling is that the stock market would not suffer, and less resources would be wasted, if trades and updates to stock prices were limited to, say, one batch per hour.

There are probably reasons the system is the way it is though.

  • CanadaPlus@lemmy.sdf.orgEnglish
    17·
    2 months ago

    Usually everything is allowed until there’s a reason to think it’s bad. This is no exception. I’d be surprised if the resources wasted are that massive, even - speed is the name of the game, not FLOPs.

    I was going to ask how your batch system would work, but I’m realising I don’t know how the servers at the NYSE or whatever work either. It takes two parties to trade, so there must be some kind of back-and-forth protocol.

    Edit:

    Ah, here we go! So as you can see, it works pretty much because orders are filled as soon as possible. If you did the same thing in hourly batches, people would try to get a better deal by snooping on other orders during the hour, and you could get stupid Mexican standoffs happening where nobody wants to name a price.

    You could probably still figure out some kind of system to make it blind, but allowing a number of servers that trade “between the trades” is a solution that works too, and like other markets has the ability to do very complex things without you, the policymaker, having to design it.