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Going Public

Themis trading

 The transition from a private into a public company, the IPO, has become extraordinarily tricky for all but the few and the lucky.

Facebook and BATS have recently given us examples of what can go wrong even FOR the few and the lucky! But consider medium-sized business, of a size where going public used to be not such a big deal. It is a huge and tricky matter today.

SEC enforced decimalization and NMS had a lot to do with this, changing the dynamics of the world of trading into which an IPO plunges such a firm.

Look at the decade before those changes, the 1990s. The average annual number of IPOs was 520. Had the rate remained the same as the size of the economy grew, one would have expected that in 2011 the United States would have had 950 such offerings. In fact, it had roughly only about 1/6th of that. The average number of IPOs annually since 2000 has been only 129.

The dysfunction may, as Arnuk, Saluzzi, and a lot of other market-savvy people think, have a lot to do with HFT, dark pools, and other games playing. Behind that, there is the encouragement given to the games by regulation (NOT by deregulation, which we definitely have not tried yet.)
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