What I don’t know about this stuff is a lot, so I’ll admit I’m speaking out of ignorance here, but isn’t the red tape there for a reason?
I've said a lot of negative stuff in the past about the Wall Street banks, and I have come to regret most of it after learning a lot more about finance. Stocks absolutely can be a way for the "rich to get richer and the poor to get poorer", and of course the traditional exchanges aren't a vaccine against that, but I do think that they do some level of vetting to make sure that companies aren't just Ponzi schemes.
I mean, for example, WeWork had its IPO rejected in 2019 because regulators were afraid about its business model, and it only ever went public through a SPAC loophole. Clearly they shouldn't have gone public at all, but some basic sanity checking is better than zero.
To be clear, I'm totally onboard with Texas making their own exchange if they can actually do it better, or at least as-well. Competition is a good thing.
Ironically, the more I learned about finance, the more I disparage it. I worked (actually) on Wall Street back when it wasn't a strip mall. It's just a casino for the vast majority of people that call themselves investors.
I do think that option contracts might be evil and a glorified casino though. It feels like they kind of end up with a means of really really rich people to extract money out of poorer people without those people actually gaining anything back; since options are (as far as I'm aware) a binary "make money or lose your entire investment" situation, and each transaction requires a winner and a loser, it definitely is very analogous to a casino.
I do call myself an "investor", but 95% of all the money I have in the market is in low-risk ETFs (VOO and VTI), which I don't think is gambling.
[1] Well, they might still be evil but I think it's a necessary evil in order to put downward pressure on the market to avoid ponzinomics.
We need a specific instance of red tape to have a debate about it. However the above questions will get you started in the debate.
But by all means, tear down all these fences without understanding why they exist. They can just be rebuilt after all, and it's not like wolves will eat all of us and our livestock in the meantime.
This assumes that the rules created themselves out of thin air and we never lived without them. In most cases, existing rules/regulations were created in response to events that proved their necessity.
And self-regulation is one of the cases where you can be pretty sure that the rule makers are intrinsically motivated to consider the downsides as well as the upsides.
It's entirely possible that they can, I'm not claiming that NYSE is perfect or anything, but in my years on this earth something has become abundantly clear to me: if there's an "obvious" solution to something, and no one is doing it, then there's probably a pretty decent reason and you're not a genius for thinking it.
The easiest example that comes to mind is the stainless steel frame of the Cybertruck that doesn't crumple, which sounds like an "obvious" good thing (no one really wants their car to break in a crash), until you realize that that drastically reduces the safety of the vehicle because a lot more of the shock transfers to the passenger, and the other mainstream car producers were already well aware of that.
Entirely possible that I'll agree with the changes, though what I'm more worried about is it becoming some vague "culture war" bullshit about wokeness or something, as seems to be the only talking point being brought up in traditionally-conservative states now.
But it's not always a good reason.
I guess you could get even more conservative and assume that the absence of a law is also intentional and we should maintain the status quo forever. I'd argue that even that would be preferable to a system where you can only add restrictions.
But if we're going to stick with it, it's very likely the fence will still work for its purpose if you remove some of the pickets. But to figure out which ones, and how many, you need to have a clear conception of the fencemaker's goal and how it currently accomplishes them or fails to. The significance of any specific part isn't a sound basis for an argument about the purpose or usefulness of the fence per se.
But, for context, all I was trying to do when I accidentally started this whole side tangent was suggest that unbounded speculation that isn't tied to concrete, specific things is unlikely to be fruitful.
As far as I can tell, the only specific thing that's been mentioned is not having an equivalent to NASDAQ's board diversity rule. Which doesn't seem like a _huge_ differentiator given that NYSE doesn't have one either?
TBH though my first instinct is to say that I doubt their rules will be egregious, and in a market as large as the USA having a third national stock exchange probably wouldn't be a terrible thing. Markets generally benefit from healthy competition, even when some of the individual competitors aren't everybody's favorite.
It doesn't mean anything to talk about reducing regulations without being specific about which rules you actually have an issue with, but it can provide the illusion of consensus.
Like we could both talk about healthcare and say that healthcare is too regulated in the US and that we should reduce the regulations! This a broadly agreeable position! But if I'm thinking of the https://en.wikipedia.org/wiki/Certificate_of_need and you're thinking of the ACA cap on insurance profits (Medical Loss Ratio https://content.naic.org/cipr-topics/medical-loss-ratio#:~:t...), then we didn't actually agree on anything, did we?
I mean, you agreed on something, which is the bloat of a system, you just disagree on the "how to fix it" part.
If I said "We need a crane that can lift 3000lbs" and you agree, and you come up with a design that uses an electric motor system, and I come up with a design that uses a diesel engine, we still agreed on something, just not the implementation of how to do it.
I realize it's not a perfect analogy, but if you and I could agree on some bad consequence of "too many regulations" (e.g. the prices of healthcare are too high as a result of the regulations), that is some common ground. The question then comes down "which regulations would be best to cut to lower costs?" and reduces to an optimization problem.
Unfortunately, the "how to fix it" part is the part that requires building political consensus. Getting agreement on X being too expensive is easy; everyone always wants everything to be cheaper.
> If I said "We need a crane that can lift 3000lbs" and you agree, and you come up with a design that uses an electric motor system, and I come up with a design that uses a diesel engine, we still agreed on something, just not the implementation of how to do it.
> I realize it's not a perfect analogy, but if you and I could agree on some bad consequence of "too many regulations" (e.g. the prices of healthcare are too high as a result of the regulations), that is some common ground. The question then comes down "which regulations would be best to cut to lower costs?" and reduces to an optimization problem.
The problem I have is that using "too many regulations" as the foundation is inevitably doomed. Lets say we find some collection of regulations that could be cut. Well, any solution is going to, at a glance, look like an additional regulation to the layman. And that's before the parasites that are profiting from the existing inefficiencies start spinning narratives about how this is another government overreach and how we're killing America.
I had previously kind of bought into the cryptocurrency crap about how "bloated" and "draconian" the banking system in the US was, and that's an easy narrative to fall into...the ACH standard is 800+ pages long! Surely us genius software engineers can do better than all these dumb financial regulators.
But as I read through the standard (I'll admit I mostly skimmed, 800 pages of dry financial text isn't exactly exhilarating stuff), I learned that, actually, most of these rules are actually pretty reasonable. It turns out that sending money between people is actually a pretty complicated thing, with tons of edge cases that you have to consider (e.g. How do you deal with fraudulent transactions? How do you deal with situations where you send money to a dozen accounts but one of the account numbers is wrong? Which transactions need to be reversible? etc.).
Definitely having a "why" attached to every single regulation could be helpful. I'm not going to claim that every regulation associated with finance is (still) necessary, but it's rarely as cut and dry as it initially seems.
Look at crypto. That's literally a system with very little """red tape""" and it's nothing more than a breeding ground for fraudulent investments because the company that promises 10% but literally cannot deliver will always beat out the companies that promise 4% but can mostly safely deliver that. If there's no punishment for lying, honest companies are at a disadvantage, because a market is not a transparent system, you cannot know the internal workings of a company that isn't required to make that info public.
https://www.businessinsider.com/nasdaq-board-diversity-sec-p...
Loosing rules is a way to figure out is a new rule set is more appropriate.