Exchange Invest Weekly Podcast 028

The first deals of the year the first results of the year. Everybody's out there executing.   This is the Exchange Invest Weekly podcast.  Hello Ladies and Gentlemen, welcome back to issue 28 of the Exchange Invest Weekly podcast. We begin with an investigation into rebates. The Financial Times was spot on this week in its opinion pages: “an investigation into rebates for brokers is much needed,” Yale school Professor Jonathan Macy noted, “but NYSE and the other exchanges are putting their thumbs on the scale by offering brokers rebates. I think they are kickbacks on the fees charged for placing certain kinds of trades.”   Think about it for a moment there, parishioners, Libor or was a shambles, where the industry paid insufficient attention to the Pinocchio stretching of interest rate. benchmarks by a few lags. And look where that ended up. The risk is clear here too with the American stock market. If you can't perceive it, I'll happily indulge you by writing a few tabloid headlines of how this will look when it blows up.    Broker rebates and the egregious bribes for order flow paid by broker dealers, amount to little more than a form of ‘payola’ according to Professor Macy. If, finally, the dark stuff hits the wind turbines, this is going to blow back and with the broker dealers payola for order flow scam, enabling i’free’ brokerage. That one will expire within 120 days of the top of the next bull market. One-800-my-broker-scammed-me-with-free-commission will be the number one number being dialed by retail punters at that time.   On broker rebates. If they are useful, the industry must make a clear case for them, within, and well beyond, the parish. I am struggling to justify what the point is to these rebates, but then again, US equity trading is such a dog's dinner you have to be certified OCD to even get a copy of cash exchange equity rules. I believe life is way too short to spend so much time complexiifying any stock market, but then again where rebates go, you must make a case or rid us of their presence. Then so too a lot of the US market structure needs a big bonfire to rationalize what is merely a big binary at its transactional heart overlapped overlapped gift wrapped, coddled and swaddled in ridiculous additional rules, regulations and complexity.    US equity trading remains an over regulated hubristically complex mess. Rebates need to go but then again, the market needs a lot of reform from top to bottom. That is surely, Ladies and Gentlemen, what we have GOP governments here to achieve?   Gosh, I feel so much better after that! On to our second story, and it relates to Well, something else that could very easily pique the rantometer: Brexit, Ladies and Gentlemen.   Reuters led us into the week with a very happy headline, “UK financial firms sentiment improves for the first time in four years, according to a survey” #despiteBrexit, or indeed perhaps because we now have some degree of clarity. Brexit is happening, although we don't quite know what the rules and regulations are going to be. And there have been some rather sanguine articles doing the rounds, noting how the UK Government is probably going to have to completely change their attitude. And let's face it, so will the good folks of Brussels too, if we're going to reach some sort of an EU trade deal. At the same time, Reuters also followed up through the offices of the excellent AFME: “Global banks urge the EU to improve market access as Brexit looms.” The interesting shift here is how the Europhil...