Intra-day Trading

[Efbe]

ok so generally you would prefer 24/7 trading.

would this create more or less stability, or not change it at all?

[Ozzie Osmond]

Efbe said:

ok so generally you would prefer 24/7 trading.

It is IMO the inevitable next step.

[DonkeyApple]

Efbe said:

good answer. but then shouldn't trading be 24/7?

It is where the underlying market has enough liquidity through the night to form an orderly bid and offer.

If you tried to do it with equities then there is no vol at night so any order without volume would slam the price.

Where an equity does have 24 hour or extended hours demand they simply lost a line of stock on the appropriate exchange like Hong Kong or NY.

Re the original question of intra day pricing and exchanges it is safer than having a single price during the day at a single point. The latter will destroy liquidity which is the sole purpose for being listed. The better your liquidity the faster and the more capital you can raise and the easier it is to use your stock as collateral or currency.

Only trading at a single point/price leaves the exchange open to manipulation which you can see in the end of day auctions which is how such a mechanism would have to work.

But in general you need the exchange to have as much liquidity as possible to function at its most efficient in all aspects from spread, comms, funding and ancillary revenues. Stocks list for that liquidity, without it they wouldnt bother. By keeping the LSE more efficient than Others and in a useful timezone, more companies list and so more companies require banking, law, accountancy, corporate finance etc etc.

It was why the Big Bang was so essential in 87. Huge numbers fought it as they knew it would end the boy's club of long relaxing lunches and money for nothing by bringing more competition and more listings and more volume.

You could also look at sthouse exchanges like the LME to see how irritating old fashioned systems are and why you lose vols and therefore revenue and profits when others adapt faster than you.

[jeff m2]

Was that 87, doesn't seem that long ago I must be getting old

I don't think long lunches was the reason they fought it.
More like the ability for a chum to correct a trade that had an extra zero

And of course the arbs lost out. The market was much slower to correct on news and reports.
So it gave slow people like me more time to make money.

Edited by jeff m2 on Tuesday 21st February 13:54