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The idea here is for a derivative trading
instrument that derives its value from your
specific portfolio in real time, and allows you to
increase or decrease its value, I.e buy or sell
some portion of it, without altering its makeup,
using fractional shares, which are already
supported by
industry
This would greatly improve liquidity for
investors, and there's really no reason other than
antiquated settlement rules why stock market
makers cannot do simple arithmetic
wired article
http://www.wired.co...itcoins-blockchain/
this open source project aims to build blockchain-like technology that can bring a new level of automation and transparency to a wide range of services in the business world, including stock exchanges and other financial markets. [xaviergisz, Dec 17 2015]
Stockpile apparently lets you routinely buy fractional shares
https://www.stockpile.com/
[theircompetitor, Dec 24 2015]
[link]
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On a similar note, I was wondering if the block chain
mechanism used by bitcoin could be separated from the
numerical mining aspect. The block chain could be used to
record ownership of more tangible assets like stocks,
bonds, commodities, real estate, etc. |
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This is more complicated than arithmetic if the securities in your portfolio are equities, then the terms of issue of those equities will apply: ordinarily, you aren't permitted to sell a half a share, primarily because then your voting right is split. Many other tradable securities are issued on an basis but I don't know enough about nonequity securities to say whether the framework suggested might work elsewhere. |
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Right calum, thus derivatives, though we already get
fractional shares through dividend reinvestment |
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Huh, I completely missed the key word the first time through, apologies. Re fractional shares on scrip dividends: my experience on the equity investment management was strictly UK and a decade plus ago, so more than likely to be wrong. P sure it's not a goer in the UK corporate regime, though. |
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Would this not make you a fund manager, and your portfolio the fund? |
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kind of, but I'd be interested in every customer being able to
do it. |
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kind of, but I'd be interested in every customer being able to
do it, and being able to do it in real time, which funds are
not even close to. It's as if you could trade an ETF of your
own portfolio. |
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Who's the counterparty on this trade? |
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//Who's the counterparty on this trade?// |
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the market maker can be the counter party, they are on most
trades anyway |
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That was true in the 1980s, before automatic trade-matching systems. Are you sure it's still true now? |
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Given the smorgasbord of ETFs on the market nowadays, I think that this idea doesn't have much utility as an investment tool. But, what if something like this could be used as a currency for daily transactions? |
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The problem that I have with Bitcoins is that they are backed solely by hype, even though there are a finite number of them in existence. The same is true of gold, although Man's desire for shiny things has remained constant throughout history. Still, when you buy gold, you're assuming that people are going to want gold at some point in the future, even though it doesn't have that much industrial use compared to other metals. |
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Compare both of those to the American Dollar. Though it can be devalued at will by the Federal Reserve, it is still backed by the might of the American army, who will mercilessly crush any tinpot dictator who has the bold idea of selling his oil or his bananas for gold or some alternative currency. The dollar is also backed by the IRS, who only accepts payment in Dollars. |
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But, what if your "currency" were just a basket of stocks. Not "backed" by stocks, but *literally* the fractional ownership of thousands of large corporations. Or, instead of stocks, perhaps a basket of futures contracts for commodities. This is the ideal currency, because it is backed by real labour and capital. A century ago, it would not have been feasible to trade stocks for furniture or groceries, but in the era of instant electronic communication, it is certainly possible for anyone with an internet connection (which is nearly everyone in the developed world) to do business with these new stock-bucks. |
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In fact, there could be competing brands stock-bucks managed by several large corporations, and even if a store doesn't price its goods in that specific currency that your card is loaded with, currency conversion can be automatically performed at checkout. |
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