The expenditures of maintaining the intricacy of the U.S. equity market are damaging the individual savers according to a report from one of the global leaders in institutional investing firms. The costs incurred by the buyside companies in order to stay afloat and keep up with the technological advances in stock trading on the U.S. market in order to continue to press on despite the trading volumes having plummeted sharply in the recent years.

The big question on everybody’s mind is whether the market is incurring more expenses as a net benefit instead of a net benefit that is translatable to net investors in general. Concerns regarding the U.S. equity market have become increasingly much more complex wherein firms across 13 exchanges and 50 alternate trading venues becoming similarly complicated as well.

Trading for the average buyside institutional companies have increasingly become much quicker which requires substantial investments in order to remain competitive in a market where intricate traders are incessantly creating high-speed trading ways and multifaceted strategies. On the other hand larger global companies are able invest more on technology; however the concern is that the cost for such an extensive industry is rising very quickly.

The comments come as US regulators and the securities industry argue regarding the merits of a wide ranging review of the country’s equity markets, where the trading patterns have rapidly been altered with the increase in electronic dealing and regulatory reforms. The holistic review was badly needed because the reforms under the SEC’s Reg NMS, implemented nearly six years ago, have increased the complexity of the US market and the number of breakdown.

The intricacy of the present market is in large due to the rational reply by the market participants to the requirements; hindrance and motivation; both intentional and unintentional are attributable to laws and regulations. Since the introduction of Reg NMS, the percentage of the share trading that has dissolved from the main U.S. exchange to private venues and internal platforms that are managed by brokers have risen to an estimated 40 %.

There’s indeed a natural complexity with the incentive firms which are making all sorts of market publicity despite the difficult situation ahead.

Last Updated: October 30th, 2013