Finally, there are some signs of more trade being done on exchanges instead of over the counter. I have been waiting for such indications and I must say that I have been a bit surprised about how slow this process has been. Liffe (the huge derivatives exchange) recorded record volumes the other day. The volume in the first half of 2008 was 25% higher than the volume in the first half of 2007.
There is a long way to go before my predictions turn out to be true but at least there are now some indications. I haven’t followed the stock price of the major exchanges but I believe they have fallen significantly. This is no surprise considering their central role in the financial markets but I think one should look into their performance relative to the major banks. If the relative performance of the exchanges has NOT been good then I think a long-short strategy might be profitable (long exchanges, short banks).
