Institutional investors need to understand the complexity of the rapidly changing U.S. stock trading world if they want to improve their portfolios performance, TABB Group consultancy said in its latest report, U.S. Equity Market Structure: Driving Change in Global Financial Markets. According to the report, written by CEO Larry Tabb, more than 55 different venues are vying to match buyers and sellers for U.S. equities.
With these 55-plus millisecond-matching U.S. equity trading platforms competing against each other and new electronic strategies enabling brokers, investors and markets themselves to connect and trade, the way traders now access the financial markets has changed radically, Mr. Tabb said in the report, adding that technology has made the old-school method of phoning a stock exchange floor broker for a trade execution ludicrous.
Mr. Tabb noted it is critical for hedge funds and money managers to understand market structure nuances. It often means the difference between beating their benchmarks or merely matching them, he said.