Gunjan Banerji
speaker
560 appearances
12 recordings
1 series
first heard Apr 2018
last heard Nov 2024
Gunjan Banerji’s voice in public audio — every appearance, attributed to the second.
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Appearances
And that forced them to hold larger amounts of capital and shrink the inventory of their riskier assets.
So some people say that that's led to trading firms kind of backing away from putting out these buy and sell quotes in the market, the kinds of quotes that make markets run more smoothly.
The way I like to think about it is imagine you are at the supermarket buying lemons and you see an advertisement to buy one for 50 cents.
When you decide to buy more than one to stock up for the entire week for your family, prices rapidly shoot up.
So the single purchase isn't as meaningful to you if the rest of the batch is available at worse prices.
And that's kind of what's happening in the options and the futures market.
And some investors we talked to have kind of backed away from trading because they don't feel like they're getting a transparent price.
Sometimes, yes, several people we spoke to for the story did say, you know, what I saw on the screen when I went to go trade the stock or this option, it didn't really make sense to me.
The buy and sell prices were so far apart.
I wasn't sure if I was getting a good deal.
Don't want to be ripped off.
I'm going to wait another day to trade.
Yes, well, some traders are hopeful that the rollback of certain regulations will help the liquidity problem.
Yes, well, the problem there is if everyone is kind of chasing the same assets because they're indexed to something, that can be a challenge for some traders.
One of the biggest risks to poor liquidity is that it can exacerbate swings in the market.
So when stocks do start to fall, as they did in early February after a prolonged stretch of calm, some investors say that that can worsen when you have poor liquidity because there are less buyers or sellers available to keep markets running smoothly.
And we cited a Goldman Sachs Group Inc.,
economist who said that, you know, the early February sell-off is an example of rising financial fragility and that poor liquidity can actually make markets less stable.
We'll have to see.
Thank you.
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