Unfortunately transparency may reduce liquidity.
After being told the past year it was just a new bubble, excess liquidity sloshing frightfully back into stocks, a mere bounce in a secular bear market, the end of capitalism and other such drivel, the U.S. investing public is being treated to a brand new bull market in equities characterized by technology innovation and strong foreign demand for what this country does.
(And, remember, the HFT defenders like to call mere trading volume, often illusory trading volume at that, "liquidity," while knowing that to be false and misleading. As Andy Haldane puts it, HFT provides liquidity during a monsoon, but withdraws it during a drought).
Besides, it is not clear that, in the scheme of things, hedge funds really matter much: they provide useful liquidity to the financial markets but, essentially, they are mere speculators who profit from correctly anticipating market movements rather than by shaping the fundamentals of the business world.
At times the author confuses liquidity with capital and debt with equity.Such mistakes may be mere annoyances, but others verge on smears.
The availability of this potential liquidity reassures the market and provides a backstop that, because of its mere presence, makes it less likely to be utilized".
To the mere mention of open, public exchanges for derivatives, you should always respond, "That will destroy liquidity in these fragile and complex markets".
Banks provide liquidity".
