Aite Group Releases Report on Equity Market Structure

A new report, released by the Aite Group, provides an understanding of equity market structure and the factors that influence trading strategy. The report examines how regulation and technology have shaped the equity market, how trading strategy considerations impact order routing, and how industry structure can limit the effectiveness of some commonly employed business strategies and tactics.

U.S. equity market structure has evolved substantially over the past 40 years. Manual, highly centralized and non-transparent through the late 1960s, the market has evolved into a highly automated and fragmented assortment of venues providing an array of execution alternatives, according to the report. The trader's ability to compare the value provided by one market center to that of another is, at best, limited, says the Aite Group. Subjectivity, imprecision and interpretive differences concerning factors that affect order flow can render the market an unclear mix of indistinguishable offerings. "The combination of market structure, order-routing decisions and industry-specific factors, taken together, have a profound impact on a market center's business operations and ability to succeed," says Matt Samelson, senior analyst with Aite Group and author of the report. "Successful business strategy is predicated upon a clear understanding of these elements, which may reveal more beneficial but less obvious strategic alternatives in favor of certain generally accepted practices," he says.