Econintersect: Between August 6 and August 13 Tabb Group, a financial markets research and strategic advisory firm focused on capital markets, surveyed 260 financial institutions involved in the trading of securities. The firms covered in the survey included broker-dealers (28% of firms), vendors (26%), asset managers and hedge funds (15%) and trade execution venues (12%).
The results of the survey showed a remarkable degradation of confidence in the operational structure of capital markets. In a little over two years very high confidence declined from 12% to 2% and very weak confidence expanded from 3% to 26%.
A variety of factors are attributed to the decline in confidence, including the poor management of the Facebook (NASDAQ:FB) IPO, the 2010 flash crash, the Knight trading algorithm blow-up and more general technology issues. It is an accumulation of factors that has raised the levels of concern; the May 2010 flash crash occurred before the data showing the higher level of confidence was obtained.
The most common structural problems that respondents said could be addressed included improving operational controls and reducing the fragmentation of trade executions among many firms.
- The Sky is Falling: US Equity Market Structure Survey Results (Adam Sussman, TabbGroup Report, August 2012)
- Yes, the Sky is Falling, Tabb Says (Tom Steinert-Threlkeld, Securities Technology Monitor, 26 August 2012)