Thursday, July 16, 2009

Danger! Paper wake

One of the realities of rapidly-evolving organizations is that they tend to create a “wake” of ideas that have been considered and rejected.

Unlike the wake behind a moving vessel, which quickly disappears without a trace, ideas discarded in the early days of an organization’s life can leave a persistent trail—a kind of paper wake. And if you see the wake of a discarded idea without a trace of its rejection, you might assume that it had been adopted.

So this post is for the benefit of any who have been concerned, as I have, about the informational advantage apparently, but not actually, granted by TRE to its “Tier One” Members.

Tier One Members are Buyers with very substantial resources that are allowed to purchase equity stakes in TRE and, in exchange, are offered certain preferences beyond the typical benefits of ownership.

I invite anyone interested to view the Buyers' Webinar on the TRE website. Toward the end of that presentation you’ll find a discussion of Tier One membership and a slide that lists the advantages offered to those Members.

Two categories of the preferences presented there seem to me to be quite reasonable and without harm to Buyers that are not in the Tier One category.

A third category of preference, though, lists several types of information, important to the analysis of trading opportunities, that would be available to the Tier One Members but not available (or available in some limited way)to the other Buyers.

This has troubled me a good deal and it has been an issue regarding the TRE process and structure that I’ve been unable to justify.

I felt it was appropriate to bring the issue to the attention of readers of The TRE Observer and to offer my opinion that ANY preferential access to information critical to trading is inappropriate and unjustified.

I am pleased to report that, after discussing the issue with TRE, I understand that:

a) the Tier One information preferences described in the Webinar have NOT, in fact, been offered to Tier One Members,

b) the information itself is not yet actually available to be offered to any Members, and

c) when it IS available, the only preference expected to be given to Tier One Members is that they would get the data without charge. Other Members would have access to all of the data but there would be a cost for that access.

Investment in the exchange SHOULD have its privileges.

Providing some information free to Tier One Members that other Members have to pay for seems perfectly reasonable to me.

As long as all Buyers have the opportunity to access all of the same data, the test of fairness is met, in my opinion.

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