Complicate, then prevaricate

THE brokers who traded shares in the Tontine coffee house in 18th-century New York often resorted to stronger drink, leaving them “a little addled”, according to one contemporary account. The technology involved in share-trading has changed a bit since then, and at least some of the participants have sobered up. But more than 200 years later, investors in American equities still wonder whether they are really receiving decent service.

On the face of things, they have little to complain about. The cost of trading has declined sharply over the years (see chart). Explicit commissions, which were once levied in percentage points (0.25% in 1792), have largely disappeared. This is thanks mainly to competition. Whereas the New York Stock Exchange (NYSE) dominated the trading of shares listed on it for most of the 20th century, there are now lots of places where they can be bought and sold.

The impetus for the...Continue reading

Source: Business and finance http://ift.tt/1R4kfE5

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