A separate stock market for individual traders and taxes on high volume and quick-turnover trading would help control the volatility of the market and bring back the public as a participant, a stock market analyst said Sunday.
Martin Mayer, author of “Wall Street: Men and Money” and “Markets,” and keynote speaker at the North American Securities Administrators Assn. annual conference, said more regulation is needed in the stock market. “While it is always a good idea for the buyer to beware, he usually needs some help in discovering what he should be aware of,” he told an audience of security dealers and regulators.
Mayer said the institutional investors and large brokerage firms control the market because they have a common interest in high volatility. “They need to show results whenever they can. So, there is a community of interest between the big funds and the big brokers,” he said. “They have too much say at any given moment.”
He said individual investors need to be insulated in a separate market with brokers who could not act as dealers in the large-order market.
Volatility could also be discouraged through a 10-cent-per-share tax on transactions and a tax on profits made on stock held less than six months or a year, he suggested.
“Institutions would have to recognize the truth that their immense holdings are not liquid and cannot safely be used as trading merchandise,” he said.