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The Trading Mesh

The Tomorrow People

Fri, 19 Jun 2015 05:05:22 GMT           

This article was originally published at the Fidessa blog, and is reproduced here with permission.
 
By Steve Grob


Josh was in high spirits, trading had been good that day. He had downloaded an algo app overnight that allowed him to arb Google dollars against Apple iCoins. It was no longer any use, of course, as by now everyone else had downloaded it too. But his edge had been that his simulator had processed it faster than anyone else. This was required by the regulator to check it contained no malware but, more importantly, so he could confirm that it would actually do what the developer claimed. Even so, it had made him a few hundred grand less comm to the algo developer. In some ways he was the new generation of HFT player, using speed where regulators still allowed him to.

As he saw the funds enter his account, he remembered the olden days when it used to take days for trading transactions to complete. The Financial Blockchain meant that deals were done instantly these days as trusted third parties were no longer required to clear them. It had also reduced the cost of trading to almost zero.

He checked his screen as there was an auction coming up on a new biotech firm, Bang Up Technology. It had raised 30 million through a seed investment platform a year ago and was now looking to raise another 300 but still remain private. Fortunately, due to the growth in micro-capitalism, there was a plethora of secondary market platforms to choose from. Bang Up had chosen a relatively obscure one that had outbid the others in order to increase its own brand awareness. Of course, he wouldn’t actually bid for the stock itself, just a derivative that would allow him to take advantage of any increase in its price. The only reason to hold stock these days was to get exposure to the dividend stream or if you wanted to actually take a company over. This had changed the way corporations worked as their share price was no longer a form of currency and so this was why the largest had invented their own.

If you’ve read this far you may be wondering what the point in all this is. There’s two. First, all the technology mentioned above already exists today and, second, if the regulators think they are having a hard time now just imagine what it is going to be like in the future.

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