Remember Bond Traders? Vanished!!
Categories: Realty Realities, Real Estate Economics, Disintermediation, The Future, Transparency, Technology, Comedy, Events and Premieres
(Greg , I think you'll like this allegory...)
Remember bond traders? The movie "Wall Street"? Bond traders are disappearing ... why? TRANSPARENCY.
When I graduated from Biz School in New York City in the mid-80's, working for Salomon Bros Fixed Income was one of the hottest jobs on the Street. Michael Lewis wrote the bestseller Liar's Poker ,one of my ATFs, based on bond trading at Salomon. I had a few bond trader friends and this is what they did - they made a lot of 30 second phone calls, one minute long if they were telling a joke - they prepared for the "fix" of the day - a collusive arrangement to make a profit spread that would reward them with an early beer uptown.
Institutional investors now pay about $1.24 per $1,000 bond in trading commissions. Four years ago, it was $2.80 per bond. Since 2002, traders are required to report sales to an NASD computer system that disseminates prices to anyone with Internet access.
This vivid quote says it all - "You have a market that was completely dark for 200 years and instead of letting a little bit of transparency in there, they just opened the windows completely and all the shades and everything, and it was complete sunshine,'' said Jeff Stambovski, a senior high-yield bond salesman.
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Great post Pat...When transparency hit these markets, confidence grew and boom! What is the Dow trading @..somewhere near 12,000? What was it back in the early 90's? 6000?
I remember when the Dow made it's initial push past 10,000 during the Clinton administration...all the media hype re: a booming economy. Where has all the hoopla gone?
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The trading commissions have been dropped tremendously as it here below
"Institutional investors now pay about $1.24 per $1,000 bond in trading commissions. Four years ago, it was $2.80 per bond. Since 2002, traders are required to report sales to an NASD computer system that disseminates prices to anyone with Internet access."
What will be the perfect reason for that?
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