Money Show 2014 - Jos Schmitt

The last Opening Remarks speaker was Jos Schmitt. His presentation was entitled "Restoring Confidence in Canada's Capital Markets: Understanding the Issues, Discussing the Solutions".

Jos Schmitt stated by talking about investor's confidence in the market. He says individual investors have the impression that they cannot make money in the market and the market is stacked against you. Also individual investors feel that the market moves in mysterious ways.

He wants to set up a new stock exchange to get back investors' confidence. One type of problem is

• Some companies have incredible speed advantages.
• Some companies have advantages that are not always good the for whole market.
• Some companies can front run with their 10 second speed average holding time for securities.
• There are liquidity issues. Liquidity seems good when there is lots of trading on a stock and stock's spread is small. If spreads are big, this is bad for individual investors. This can be caused by high frequency trades of which 90% disappear in 1 minute.

A second type of problem is that market makers are disappearing. They can no longer make any money.

A third type of problems is transparencies. Only 20 to 30% of the trading is taking place on the TSX. However, when we see quotes they are all from the TSX.

So the problems we have are fairness, liquidity and transparency. We need a new stock exchange to get rid of these problems. We need an exchange to give priority to investors and put in speed bumps. This new exchange will be

• A listing platform where corporations can go to trades their shares on the exchange
• A trading platform where stocks are traded that are already listed
• It will only list companies that are set up for success.

The new exchange will re-mutualize an exchange. Issuers and investors will have first priority on the exchange.

High Frequency Trading (HFT) is 50% of the market in the US and 20% in Canada.

On my other blog I am today writing about Molson Coors Canada (TSX-TPX.B, NYSE-TAP) ... continue ...

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