Financial exchanges are outdated financial constructs, no longer serving the nature of investors and companies they were assigned to serve. And they are far from free-markets.
I write a lot about how our financial systems across the board are no longer in tune with the assets they are assigned to manage. I specifically highlighted an article about the NASDAQ seven years ago and the NYSE five years ago on how these exchanges fail to live up to fundamental free-market principles — preceded ten years ago by an article on cheating platforms, bad for our country.
I highlighted then how a forty-year-old technology company like HP, should be able to choose how it wants to trade its newly issued shares and report commensurately, and not be beholden to artificial one-size-fits-all rules established by the intermediary, the bourse.
Financial exchanges must modernize to offer the kind of trading options like some of the ones available on eBay, with principles derived from the Dutch auction system honed to perfection in the sale of tulips in the 1600s, where the seller and the buyer choose and change from many rules of trade, with the exchange merely ensuring the integrity of legality and fairness of the exchange.
Today, our financial exchanges fail to offer the proper trading mechanisms to meet the needs of dynamic companies and investors alike, and worse, those exchanges violate the most fundamental free-market principles our country promotes to stand for.
If Tesla would have the option to trade its shares as it wishes from the beginning, and with new trading mechanisms could have avoided selling to short-sellers bothering them with unnecessary quarterly earnings distractions, the merit of Tesla aligned more authentically with the merit of value investors. Making it useless for Tesla to go private and leave the exchange.
So, dear NASDAQ and NYSE, Tesla, even considering to leave the exchange, should be a wake-up call for your exchanges to innovate. Stop promulgating your hollow rhetoric of free-markets without understanding what the pursuit of freedom genuinely means. Or more companies will follow in Tesla’s tracks, and the lack of freedom will leave you high and dry.