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Securities Trading

February 21, 1988

It's time to revamp the whole worldwide securities trading system. Some of the reasons for the need for this are found in James Flanigan's Jan. 13 column, "Stock Market Needs to Watch Biggest Players," concerning the recent gigantic gyrations in the stock markets.

Flanigan pointed out many stock trading problems. He mentioned that, during the October crash, information on stock prices could not keep up with the pace of trading, and that there "were conflicts of interest as brokerage firms put their own interests ahead of their customers'."

In addition, Flanigan wrote that clearing and specialist firms "were undercapitalized before the crash and are hurting more than ever now. So they're not able to keep price movements as regular and narrow as they used to be."

Worst of all, the specialist system is outmoded. We have the technology for it, so why not let computers make the markets for securities 24 hours a day? Phase out the specialists. Let buyers and sellers worldwide place their orders with their push-button telephones. Let that be the force to stabilize the price of a security, although no doubt price change limits would needed to be set to prevent enormous run-ups and crashes in volatile markets.

What's needed are efficient computer systems, faster than humans and devoid of conflicts of interest. World securities markets cannot be effective any other way.

LARRY KELBLEY

Rancho Palos Verdes

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