So, Chicago Board of Trade chairman Nick Neubauer has
taken the opportunity of has last annual meeting speech to
members before next month's election of a new chairman (Charlie
Carey - see page 3) to get one of his bugbears off his chest.
Market integrity. Internalisation is a particular gripe, with
Neubauer summing it up with the phrase "a man cannot serve two
masters". But, for those who don't quite get the fuss about
internalisation, Neubauer explained it as follows: "Imagine you
hired a real estate agent to sell your house and he told you it
would be better if he, the agent, bought it from you instead of
and before showing it to other buyers. He collects a
commission, plus buys the house - that's internalisation. If he
sells the opportunity to buy the house to another broker,
that's payment for order flow. And, by the way, after either
broker has bought your house, you can bet he doesn't short
circuit his profit by just showing it to one person. He shows
it to the entire market for the best price he can get, which is
what he should have done in the first place if he was truly
acting as your agent." So, is that clear?
This article is available exclusively to subscribers
Please log in to continue reading.
Not yet a subscriber?
Click here to take a free trial.
Already have an account? |
Please fill in your details below and a customer service representative will contact you.