This seems like really deep technology. What is the one sentence describing who would use this and why though? Maybe that's in the long block of text somewhere.
I work in fintech for broker dealers so I'm genuinely curious what is the use case here.
I work in fintech for broker dealers so I'm genuinely curious what is the use case here.
That it is!
> What is the one sentence describing who would use this and why though?
Today's market structure costs institutional investors (and by extension households) at least a trillion dollars annually (and Smart Markets hold the potential to eliminate that loss).
There has to be a lot of additional data gathered at the time of 'intent to purchase or sell' - because otherwise your solution eats away a lot of powerful institutions alpha. And without 'novelly' expressive orders, there's no new place for them to go... that Trillion dollars doesn't just evaporate in today's world.
We've already seen this in sourcing markets [1]. Capturing more information at the time of bidding resulted in massive (40-60%) efficiency gains for both sides of the market.
[1]: https://kilthub.cmu.edu/articles/journal_contribution/Very-L...
That said, there are a lot of people who make good money making inferences from these current concrete dynamics - in some sense, you're just forcing the market to innovate (this is good).
I always like to know who I'm asking to change when building products -- and this one is a very interesting (read: fun and potentially lucrative) set of actors.
> Today's market structure costs institutional investors (and by extension households) at least a trillion dollars annually (and Smart Markets hold the potential to eliminate that loss).
How does one get to this estimate? That is ~5% of US GDP. Everything else was easy to follow - this seemed high, at least intuitively.
Portfolio returns compound exponentially, so even small inefficiencies matter big time.
[1] https://www.blackrock.com/corporate/literature/whitepaper/vi...
How do you think about it? Let's say we expect half the benefit to come from equities.
>> 0.5T / 125 T = 0.004
>> Smart Markets would need to raise portfolio returns by an average of .4% (net of trading costs) annually.
That seems like a significantly lower upper bound to the market size here.
That said, what seems interesting here is to come up in advance with many potential arbitrages, and load them in advance for fulfillment if they occur. Risky but interesting than having to roll your own complex tool for this.
https://www.ibisworld.com/industry-statistics/market-size/on....
(FWIW and not that it's the market that we're going after per se—our strategy is mostly blue ocean—the market for US equities electronic execution services across the whole stack of technology, market data, broker algos, etc., is $18B/yr.)
This isn't clear to me - are your buyer's institutional investors? Are they buying your technology to create trade options for their end users i.e. an individual investor? I don't know what an ATS is so I gather that I'm not a direct user of your technology - perhaps I would be an indirect user? Would E-Trade, for example, leverage your technology to provide me with a combinatorial buying option?
That said, we'd love to get to the point where E-Trade etc. are offering combinatorial bidding to retail traders, with us on the back end.
In stocks, A might be a company you invested in and B some ETF that you bought as a hedge for A. What if you sell out of A, and then the price of the ETF drops? There's value in being able to liquidate the full position - the single stock plus the hedge - at once.
lol. source / evidence?
By your own data above, if typical fees are $0.0009 per share traded, $1tr in costs implies notional value of instruments traded each year of approx $1x10^17, assuming average price of $100 / share.
What is the subject and the verb for the problem you are solving and for whom? This is too vague.
The most interesting aspect of this is that its enabled non-dealer <> non-dealer trading via certain venues.