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Can anyone explain why you would even consider single stock futures instead of
just loosening margin requirements and eliminating the uptick rule? Plus consider
the administrative burden introduced to monitor insider trading, front running,
etc. in both the futures and the stocks at the same time (of course, we have that
same burden for options now, so it IS managable).
Regards
DanG
I4Lothian@xxxxxxx wrote:
> We already have single stock futures here, they are called synthetic futures
> by buying a put and selling a call at the same strike on the options on a
> stock, or visa versa.
>
> Thus, you can effectively use futures-like equivalent to hedge or trade
> stock, but it is costly and cumbersome. The time is now to change the laws
> and open the U.S. markets to innovation before some offshore non-U.S.
> exchange creates the market and attracts the volume.
>
> I believe single stock futures would attract additional volume to stocks and
> create additional arbitrage opportunities which will only help liquidity in
> the underlying stocks. Combine that with a central time price order book for
> stocks and I think you have some efficient markets and an up to date
> regulatory structure in the making.
>
> Regards,
>
> John J. Lothian
>
> Disclosure: Futures trading involves financial risk, lots of it!
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