Article Summary
Traders who set the National Best Bid and Offer (NBBO) may be the biggest losers in the face of increasing market fragmentation. This situation highlights the unfair economics of price setting and data use in the current market.
What This Means for You
- Be aware of the impact of market fragmentation on your trading profits, as it may affect your ability to set the NBBO.
- Consider diversifying your trading strategies to account for the changing market dynamics and protect your bottom line.
- Stay informed about regulatory changes and market structure developments to adapt to the evolving landscape.
- Future outlook: Prepare for potential reforms aimed at addressing the unfair economics of price setting and data use in the market.
Original Post
We look at trading economics from the perspective of trader setting the NBBO. Our analysis suggests they are perhaps the biggest loser from increasing fragmentation, which, in turn, highlights how the economics of price setting and data use in the current market are quite unfair.
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