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Building Trust Through Transparency: Why It Matters For Brokers and Investors?

Almost all the world’s leading technology giants are listed on NASDAQ. Moreover, it operates in more than 29 markets in several countries. Yet, for such a grand entity, the platform still sticks to the age-old broker models, technologies, and red-tapes. Beyond financial exclusivity and high entry barrier, the platform has failed to adopt cloud technologies and address unethical practices with a firm hand. And most importantly, has a bias toward institutional brokers over others. This article talks about the areas where NASDAQ has overlooked transparency. And as a result, lost the trust of brokers and investors. It also points out a few plausible solutions to deal with them before it breaks the dam.

Legacy Brokerage Model Nickle-and-Dimed Decades Of Trust

There wasn’t one big setback or large media-turning market manipulation case that has put NASDAQ’s traders in a situation to question its standard. Years of discrimination, fear of unknown elements, and market manipulation, have slowly drained the trust of new and small-time traders. Surprisingly, the platform does not lack technological resources, financial strength, governing bodies, or other agencies to point out these fallouts to save the Dyke.

  • Discrimination At All Levels

At the entry point, NASDAQ has a very high cost of market entry. A potential broker has to pay $5,000 to $500,000 to set up their career. Unfortunately, most budding entrepreneurs and small-time brokers would tap out of the game even before entering it. Those who scrabbled their way into the fight would find discrimination with a lack of access to AI tools, cutting-edge technologies, high-frequency algo trading, and more. 

  • Information Is Not For All

A small-time trader does not have immediate access to real-time market data. Thus, institutional traders can easily play quote stuffing, spoofing, price targeting, and stale prices. The brokers have to throw dice to decide whether the market movement results from some macro or micro market factor or a push from the giant fish in the sea. 

  • Technology Dependence Increases The Complexity

Retail brokers must shell out big money to integrate cutting-edge AI and ML tools, server hosting, maintenance, support team, and more. For the same reason, only the institutional traders have access to high-frequency algo trading while the rest have to work at tortoise speed.

Also Read: Choosing the Best Crypto Broker: A Comprehensive Guide

Bias Towards Institutional Traders

Institutional investors like large equity firms, mutual fund entities, hedge fund groups, and others get the best of the bunch, In regards to analysis tools, top-edge server features, access to high-frequency trading tools, and the financial upper hand to enter the market. And beyond these, NASDAQ has consistently shown bias towards prominent players in other areas too.

  • Market Manipulation Left Unnoticed

There are several manipulation incidents yearly, and NASDAQ gets hold of only a handful as it is hard to prove the fact. Even after proof, it takes several years of auditing, analysis, and legal hearing to get to a conclusion. The violators are not delisted from the platform even when such manipulation is identified and proven. Most of the incidents get blown by the wind. For instance, JP Morgan, Goldman Sachs, Carlyle Group, and Wells Fargo are still the leading players, even with several manipulation charges.

  • Membership Limitations

Low-income traders do not have the same opportunity to enter the market as institutional traders. Most of the checkpoints and criteria kept in place are more of a substantial roadblock rather than a legal requirement. While several platforms like PayBito can complete the KYC and AML criteria within minutes, why does NASDAQ take several months and a hefty price tag? Beyond this, a small-time trader lacks access to several trading options creating a monopoly.

Transparency & Trust – Adopting Better Technology Can Repulse Discrimination

The brokerage model in place was introduced several decades ago, and clinging to age-old practices is increasing the overhead and complexity. However, NASDAQ does not have to redefine itself from scratch to gain trust ultimately. After all, it has already made its first few moves, like increasing the fines and punishments for market manipulation, sharing details about such cases, and more. For instance, institutional traders can no longer stay mute without denying or accepting the charges and paying the fines to close the case. So here are a few more changes that can put trust back into NASDAQ.

  • Facilitating Cloud Technology

It is not an easy task to integrate cloud technologies into a vast platform like NASDAQ. However, the benefits outweigh the complexity. The advantages of cloud integration are introducing BaaS (Brokerage-as-a-Service), which improves simplicity, affordability, and immediate access. Moreover, it helps reduce the dependency on large locally-hosting servers, service teams, technical expertise, and more.

  • Brokerage For All

Offering a common platform with in-built access to AI and ML tools can improve financial inclusivity. Using a Data Engine on a legacy broker platform while allowing all brokers access to all tools and reports can reduce market manipulation frequency. Any trader can customize those tools to suit their trading tactics, risk threshold, etc.

  • White-Label Solution

While the crypto-trading realm has its white-label solution, PayBito, NASDAQ, has not yet ventured into that possibility. The presence of a white-label solution allows brokers to create their individualized brokerage service instead of working under bigger brands. Such a white-label solution can democratize the brokerage system allowing a new population of brokers. Fresh blood increases the chance of better market growth and sustainability.

Wrapping Up

NASDAQ has advanced features and technological strength to stay a leading player for decades. However, its resistance to adopting newer technologies makes it brittle to environmental factors. The idea is not to reduce the access of institutional traders but to improve the opportunities offered to small-time and new-entry traders while keeping unethical practices at bay.

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