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A blog on financial markets and their regulation
In a free-wheeling article on markets and market places, in today’s
Financial Times, columnist John Kay discusses the problems at the big exchanges in Chicago, London, Frankfurt and New York. He also finds time to talk about the Fulton fish market in New York and the world’s largest produce market at Ringis near Paris (John Kay, “In search of a quiet courtier”, Financial Times, August 9, 2005). After that, he has this to say about eBay:
“The most successful for-profit marketplace today is eBay. But it has not yet made much money and the issue for its future is whether it can reconcile shareholder expectations with the iron law of natural monopoly – to exploit it is to lose it”.
Though Kay does not mention this, the big difference between eBay and the rest is that while eBay centralizes trading like the others, it does not centralize settlement. This allows eBay to handle millions of separate non fungible physical settlements – something that none of the big exchanges or clearers can even dream of.