COMMENTARY: A Market Structure That Fits the Needs of Portfolio Managers

Abstract

Trading “these” securities for “those” (portfolio trades) can be expensive if done through our current continuous markets. This article compares a broker-implemented blind bid solution to this problem in a continuous market setting versus a combined value computerized call market that maximizes available liquidity to create balanced trades between such lists. The technology is known: combined value markets are in use today servicing markets in logistics contracts, emissions permits, spectrum licenses, and aerospace procurement. Should not financial concerns, such as custodial banks, be currently offering such services to their clients?

TOPICS: Exchanges/markets/clearinghouses, portfolio management/multi-asset allocation