Before the computer market stood in one place

In the sky, stars disappear. They are engulfed by what astronomers eventually call black holes. In finance, the mysterious disappearance is rare. The banks are sinking because they did anything. But a highly symbolic institution is now threatened with absorption: the stock exchange. Normally, it should be in full sunlight. It is even one of the conditions of its effectiveness. It was long which was approaching the most pure and perfect market dreamed by economists. With transparency therefore, many exchanges, a crowd of buyers and sellers too small to affect prices, perfectly identical products.

Today, everything changes. The stock exchange is erupts, to the point of escape to the clarity. In Europe as in the United States, the exchanges of shares spin into darkness. While the financial crisis of 2008-2009 showed just the huge damage that could cause financial transactions hidden in the "shadow banking system" - the shadow banking system! Of course, there are still daily quotes. But a place like Euronext manages more than two thirds of the exchanges of shares in the countries where it works. Other transactions have migrated to other places like Chi - X, BATS, Turquoise or the "dark pools" - "opaque platforms" official French.

This fragmentation has two causes. The first is technical. Before the computer market stood in one place. There was nowhere two awards in the same town selling the same actions. There was a "natural monopoly" - which has led to an annuity, as indicates the luxury of the Palace of the scholarship around the world. With the computer and electronic lines, and then Internet, this monopoly jumped. Everyone can create his small market in his corner at low cost.

But trading activity is corsetée to avoid so many financial Follies in history. This is where the second case. It is political. The rulers have decided to end this unfair monopoly. The stock market was to be himself in the market, in competition with other places which share the same titles. To lower the cost of transactions, to give the choice to the consumer (the buyers and sellers of shares). The United States opened the game in 2005 with the Reg NMS (Regulation National Market System). About thirty "dark pools" to work today. Europe followed with its MIF (markets in financial instruments) directive came into force late 2007.

The problem is that nothing has worked as expected! Operating on multiple platforms, buyers and sellers share of smaller quantities, and therefore pay a higher commission. They do not have the discretion expected, because their movements are more visible on less vast markets. They should also seek information in several places, which added costs. In its report published on June 11, the French authority of des marchés financiers (AMF) said cautiously: "the proliferation of platforms of execution of orders was to first effects the liquidity fragmentation and degradation of transparency for issuers and investors, without so far that could be a real decrease in costs for end investors." Clearly, failure on the line. The opening to competition took none of the expected benefits.

Even worse: it has formidable perverse effects. The rise of the "flash trading", these exchanges based on differences in price to the millisecond, comes mainly from the fact that same action is rated at the same time in several places. Flash trading is probably one of the explanations of the "minikrach" observed on 6 may last on Wall Street (-9 in five minutes). A crash which is also explained by the differences between the platforms rules applied brutal fall of the course of an action (blocked on the New York Stock Exchange operators rushed on other places, clogging them instantly). Listed companies are not more day. Evidenced by the projection of Martin Bouygues, end of 2009: "I don't know what is happening on my credentials." The CEO of the eponymous Group also explained that its "listing costs soared 150".

Why such a failure Basically, the explanation is simple. Instead of conducting economic reasoning, an ideological decision was made. The stock market should be on the market, because competition is supposed to always be the best system. But this is not true. A private market can sometimes be public service, that the European Commission calls "services of general economic interest". And it is better to have a unique network of distribution of water in a city rather than rival distributors asking pipes in all directions, it is probably more effective to have a single market stock, both deep, transparent and open to all. Of course, it may be operated by a private, provided they be subject to close public regulation player - what is, in any event, already the case. Academe nannies males from the planet finance, stock market, it is better to have one.