Umair Haque / Bubblegeneration
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Friday, July 09, 2004


Automarkets

Here are some stats from this Journal blurb, which tell us how capital flows through the stock market, and how machines have a more and more prominent role in allocating capital - part of the reason why the joint-stock corporation is an obsolete organizational form:

"...Program trading in the week ended July 2 accounted for 58%, or an average of 808.1 million shares daily, of New York Stock Exchange volume. Brokerage firms executed an additional 565.9 million daily shares of program trading away from the NYSE, with 4% of the overall total on foreign markets. Program trading is the simultaneous purchase or sale of at least 15 different stocks with a total value of $1 million or more.

Of the program total on the NYSE, 9.2% involved stock-index arbitrage. In this strategy, traders dart between stocks and stock-index options and futures to capture fleeting price differences. Less than 0.1% involved derivative product-related strategies. Index arbitrage can be executed only in a stabilizing manner when the Dow Jones Industrial Average moves 200 points or more from its previous day's close.

Some 54.5% of program trading was executed by firms for their clients, while 41.8% was done for their own accounts, or principal trading. An additional 3.8% was designated as customer facilitation, in which firms use principal positions to facilitate customer trades."

-- umair // 12:19 PM // 0 comments


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