|New age, new traps|
Fifty years ago, you had to be a "good listener" to make it big on the stock market – or so some brokers say. Amidst the buy and sell orders shouted out by the gentlemen in the "corbeilles" – the circular, basket-shaped trading areas of the time – it took a sharp ear to understand whether the market was moving with the bulls or the bears. Being a broker was quite a challenge. Experience and a knack for the business were absolutely necessary.
Time passed and electronic systems now prevail as the means to seek out the best and most transparent pricing for everyone. With technology's blessing, it became possible to disseminate orders to all participants at the same time, with speed and equitability. Ironically, decades later markets are threatened by the same technological progress that once brought them security and credibility.
These days, the front-runner may not be the broker with the good ear to "hear the market", but rather the one equipped with high-frequency trading systems, able to process transactions in milliseconds and exploit micro-differences in price that are not available to everyone. In the United States, there is a fear not only of super-fast systems, but also of the proliferation of alternative trading platforms. Some use the price references provided by the stock exchanges to perform anonymous transactions at possibly more advantageous prices.
It's true that most of the problem is currently contained in the U.S. Fragmented, with many exchanges and alternative systems currently in operation, the world's largest capital market is surrounded by the traps that emerged from its complexity. But we believe there is a good reason to choose this topic for our June issue's cover story. Although concerns with this problem are not yet relevant in Brazil, it's never a bad idea to look abroad and see what's going on in the markets that inspire us. After all, there's still time for us to pick less tricky models than they did.