Nevertheless, I alternatively believe that dislocations of the spread due to market impact and to intra-day price volatility are far more important than the size of the spread, per se. This reorientation is important, regardless of the market center being considered. Let us now turn our focus to Nasdaq and to the steps this market is taking. I first call on my good friend and co-author to say a few words. We live in an incredibly interesting period characterized by an ever-rising rate of technological development.
Instability continually increases with the rapid development of communication networks.
It is easier to find the other side of the trade and hence the need for intermediary services is diminishing. The rules are changing rapidly, but the good news is that the trading volume is exploding. It seems we re heading in the direction of multiple competing trading venues, rather than the implicit design of the 1975 Securities Act. Fragmentation is a synonym for competition. Now economic theory tells us that utility is maximized when we permit competition to flourish, so market centers that encourage and facilitate competition for order flow will fare the best.