Among the more notable impacts of this Citi news, the fact that Morgan Stanley now remains as the sole major Wall Street bank still standing as an intermediary for retail option flows ranks high. Whether it is to be utopia or oblivion will be a touch and go relay race right up to the final moment…” – Buckminster Fuller On September 23rd, the Financial Times reported, “Citigroup halts market making in retail options” in an apparent response to the challenges brought about by the era of zero-commission retail trading an era that is swiftly nearing its one year anniversary. “The future is a choice between utopia and oblivion. Now, considering that 33 alternative trading systems (ATSs) and at least another 12 internalizing broker-dealers (including wholesale market makers, single dealer platforms (SDPs) and central risk books) executed trades in NMS (national market system) stocks in 2019, US equity market fragmentation continues to Here’s the evidence: By now, most of you know that the launch of Long-Term Stock Exchange (LTSE), the launch of Members Exchange (MEMX), and the launch of MIAX Pearl equities exchange – all of which going live this month – bring the total number of US equities exchanges to 16. Taken together, however, they paint of picture of increasing levels of market complexity coupled with increasing dependencies on fewer dominant players. And then there are others that are much deeper down in the weeds. Individually, most of these have been on the radar of those that follow capital markets closely. “Nothing vast enters the life of mortals without a curse.” – Sophocles With a geyser of attention-snatching news as our normal daily backdrop, one could easily be forgiven for missing a signal from a collection of recent market structure clues.
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