Insanity: Screening elements in the HV

Jonathan_S wrote:Their stock markets would have grown up and evolved in that environment of economic and market isolation; and I don't think the transit times have yet dropped sufficiently to significantly change that situation. Yes that will have changed some; for example I expect that major interstellars are listed on multiple system's exchanges to facilitate the trade of their stock between occupants of each of those systems -- but the linkages between those disparate systems' markets seem like they'd be far more tenuous. And some daughter colonies might be close enough to their parent system that most of their businesses might wish to be traded on said parent's markets (the advantages of access to more capital and liquidity possibly outweighing the disadvantages of having such delayed access to the market where your shares are traded)

And like their economies also would have matured in an era where self-sufficiency was at first required, and even afterwards still quite beneficial. The Core worlds would have had diverse and well established economies centuries before it even became possible to routinely ships goods between the stars -- and being self-sufficient likely resisted losing significant share to foreign imports. (But even a tiny fraction of a Core world's economy is more than large enough to let fortunes be made in interstellar shipping; even while it might remain almost insignificant to the economy as a whole)

While most of the Core Worlds are well developed and should still have a lot of materials available to them in-system for most needs the challenge comes with the whole concept of Interstellar economies and development of trade in goods, materials and knowledge comes into play. Ask yourself why there is so much interstellar trade. Because there is usually somebody or a range of somebody who can build/manufacture things that are of higher quality, have better tech, or can do it at better prices. And then there are things that are considered premium goods (like Montana Beef) or that can't be acquired from usual sources. The shipping is moving goods, people, data/commuincations to places that want or need to acquire it.

At one point you could acquire stock ownership for companies outside the National territory of any of the financial centers of many companies but you were removed by time and distance from where those companies were headquartered and or were generating product or income. Think the Dutch East India Company importing spices, other products from the other side of the world. You could buy and sell shares but unless you physically sent the shares to the company headquarters or the Amsterdam Exchange, you bought or sold as you could where you could do the transaction. in the 21st century Earth financial markets- trading effectively goes on 24/7 because some exchange is always open and you can (if you have access) trade electronically.

Moving money is similar in the Honorvers- a blend of in-system financial transactions via electronic communications and sending Drafts though courier systems (letters of credit, and variations) which will be delivered to pay for or transfer money to your account in system X. You get your funds in-hand the same way. You're working through what are either a Factor system or Correspondent Banking system using primarily electronic orders via a bank or financial house in your system to their contractual partners somewhere else. We have seen credit chips mentioned on Bank of New Madrid. That would be an analog of something like the Rothchild banking house or trading houses in London or Amsterdam (pick a city) who will buy things for you or provide funds for you to do business where they are based on the funds they have and agreements you your own Bank/Banking house. Your "bank" or trading company (think Hudson's Bay Company)helps you buy and sell goods. It's more complicated that that but they allow you to move money around.
What usually gets overlooked is that these merchant banking operations are taking fees for the services and they would (again, think 17th, 18th, 19th century colonial development and you sell your agricultural products to your factor who ships you the stuff -or buys it- and place orders with them for what you need from the home country or elsewhere) England was prohibiting actual money -in those cases hard currency of silver/gold/copper- from being sent to the colonies and required the people there to ship their agricultural products or other things back to England. And they couldn't have a local colonial currency-

Manticore, by virtue of its operation of the Junction, is a focal point for the passage of trade and it is getting paid for transit though the Junction. It also (until Oyster Bay) was a major exporter of a lot of goods even if it was also importing from elsewhere as well. Think about a Manticorian company offering a product that somebody out in Silesia wanted/needed at a price below what was being charged by manufacturing in a Core World -and that might only because the shipping cost to get it from Manticore to destination was both less expensive than shipping from said Core World just in cost of time on the ship but not having to have the share of the junction fee TO and Through Manticore on a SL flagged ship.

The Manticorian Government and the various shipping companies headquartered there are making the most of their advantages and apparently investing wisely to both expand their reach and make more money

Brigade XO wrote:Manticore, by virtue of its operation of the Junction, is a focal point for the passage of trade and it is getting paid for transit though the Junction. It also (until Oyster Bay) was a major exporter of a lot of goods even if it was also importing from elsewhere as well. Think about a Manticorian company offering a product that somebody out in Silesia wanted/needed at a price below what was being charged by manufacturing in a Core World -and that might only because the shipping cost to get it from Manticore to destination was both less expensive than shipping from said Core World just in cost of time on the ship but not having to have the share of the junction fee TO and Through Manticore on a SL flagged ship.

The Manticorian Government and the various shipping companies headquartered there are making the most of their advantages and apparently investing wisely to both expand their reach and make more money

I agree and therefore I stand by what I said about Manticore having developed as THE financial centre, but I will qualify that. It's not the financial centre for everything, because that can't be accomplished anyway in the HV. Each planet and maybe each system has its own, local financial system and stock exchange, and the vast majority of all investment is local. Some of it is in regional exchanges for region-local interstellar concerns. And between Core Worlds, that would be too.

Manticore corners the market on interstellar commodity and long-haul investment. This isn't a market that had existed before wormholes, because places were just too far and interstellar commerce was too weak. So actually the best comparison for Manticore wouldn't be the NYSE, but the Chicago Mercantile Exchange.

tlb wrote:That is interesting; but why would the Core Worlds each go their own way, when there is a shared economy in the League and there is trade between those worlds? We definitely know there are interstellar companies, so how does that affect the supposed local markets?

Both England and France had colonies in the period before the telegraph, but the primary financial market in each was still in the capitol city of the home country.

Jonathan_S wrote:In part their economies aren't so integrated. The books seems to say that while interstellar trade is quite extensive each core world is essentially self-sufficient -- they don't need interstellar trade and it doesn't seem to make up a significant fraction of their economy. So there doesn't seem need to integrate their stock markets.

Also history would have driven their markets apart. Even today the core worlds are weeks or more round-trip apart, but they developed when they were vastly more isolated than that. From the end of the final war until the Warshaski invented the grav detector (and shortly aftewards the sail) which combined finally made hyperspace travel safe enough for commercial use was about 300 years. And for at least another couple hundred years after that (up past the point the Junction was discovered) even the fastest dispatch boat was (IIRC) limited to the Beta bands -- so over 6x slower than the modern Honorverse. So even Core systems would have been months round trip time from each other back then.

Their stock markets would have grown up and evolved in that environment of economic and market isolation; and I don't think the transit times have yet dropped sufficiently to significantly change that situation. Yes that will have changed some; for example I expect that major interstellars are listed on multiple system's exchanges to facilitate the trade of their stock between occupants of each of those systems -- but the linkages between those disparate systems' markets seem like they'd be far more tenuous. And some daughter colonies might be close enough to their parent system that most of their businesses might wish to be traded on said parent's markets (the advantages of access to more capital and liquidity possibly outweighing the disadvantages of having such delayed access to the market where your shares are traded)

And like their economies also would have matured in an era where self-sufficiency was at first required, and even afterwards still quite beneficial. The Core worlds would have had diverse and well established economies centuries before it even became possible to routinely ships goods between the stars -- and being self-sufficient likely resisted losing significant share to foreign imports. (But even a tiny fraction of a Core world's economy is more than large enough to let fortunes be made in interstellar shipping; even while it might remain almost insignificant to the economy as a whole)

We have had low cost interstellar transportation long enough now that it seems to me that the Core Worlds might have become more connected than you state. After all the main reason for the creation of the League was to regulate commerce between worlds.

Be that as it may, what I actually want to discuss is the suggestion that an interstellar corporation might sell its stock in multiple marketplaces. I realize that American depositary receipts allow a foreign company to sell its stock on the New York Exchange, but in the pre-telegraph analog I wonder if that was a good way to do it.

So suppose a corporation sends out a block of stock to each of three different exchanges and in one there is high interest and another there is low interest. You then have an arbitrage situation where someone could buy in the low interest exchange and transport it to sell in the high interest one. A much better managed way would be to only sell in one market and all interested parties transmit their buy and sell orders there. Once such a market gets set up to efficiently process those orders, then other corporations would join in.

PS: Do all the systems in the League share a common currency? If they do NOT, then fragmented markets make more sense.

tlb wrote:Be that as it may, what I actually want to discuss is the suggestion that an interstellar corporation might sell its stock in multiple marketplaces. I realize that American depositary receipts allow a foreign company to sell its stock on the New York Exchange, but in the pre-telegraph analog I wonder if that was a good way to do it.

So suppose a corporation sends out a block of stock to each of three different exchanges and in one there is high interest and another there is low interest. You then have an arbitrage situation where someone could buy in the low interest exchange and transport it to sell in the high interest one. A much better managed way would be to only sell in one market and all interested parties transmit their buy and sell orders there. Once such a market gets set up to efficiently process those orders, then other corporations would join in.

My thought on the secondary exchanges wasn't so much that companies would make stock offerings there, but that there would be enough stock of a given core or interstellar company that residents of other systems would wish to have an organized way to trade it with each other should they not wish to deal with the time delays or pricing uncertainties of sending their buy or sell orders all the way to that stock's primary exchange.

So even if that market wasn't the same as, say, Manticore's Wall Street there would almost have to be some market for folks on Manticore to buy or sell shares in, say, Iwahara Interstellar without the order going all the way to Sol. (If you need the money now, and not in two weeks -- or are fine with a local price and want to know you can complete the order, such a local exchange would be very useful)


But yes, when a company's shared are exchanged in multiple locations there's a chance for arbitrage. If someone knows (or suspects) that a company is relatively undervalued in one market they could absolutely buy up shares there, transport them to a higher valued market to sell them. They take the risk that their information is wrong, or is overtaken by events, but if they're correct they reap the profit. And performing that arbitrage would help keep the only loosely connected markets somewhat in sync.

So far in the Honorverse, the currency systems are sort of two tiered which actually is actually an analogy of what we see in 21 century Earth with a major caveat

in our present time, the major powers like the USA, UK, European Union, Russia, China etc have their own currency. To greater or lesser extents, those currencies and those such as the Japanese Yen have an active international market for the buying and selling of same. Also at the moment the Ruble of Russia is in trouble because of several economic pressures on that country.

When you get move out to the Honorverse, the major currencies are Solarian League, Star Empire of Manticore, Alderman Empire, etc and while there are market for the currencies they are used as the basis of payment and trade within those Star Nations. Typically, contracts and purchases are made in the currency of the Star Nation (or League) when people are buying there. ---this is NOT to be confused with the tourist impact with which people are using local currency (or "credit cards") to my things BUT because they are used to or want to be used to bringing in "tourist money" local merchants will accept multiple currencies s on a regular basie. Like much of the EU will let you pay in Euros, US Dollars, British Pounds --as you shift in the direction of Asia places will/ may take USD or Euros but not other currencies....they want to be paid in local currency. This does shift as you move down in size of country and its general economic strength. You go to Iceland and they really want you to use the local currency OR plastic. Depending on where you are there you MAY be able to use USD in places but others than the local currency you're usually only going to use Euros- and get your change back in Icelandic money. Part of that is the ability to convert foreign currency into something usable in the local country market. Part is that keeping up with foreign exchange rates (cell phone data plans and electronic transactions on credit cards with settle with "current" "buying/selling rates" in the electronic markets. SOME overseas possessions of France will accept Euros but usually they want whatever the local multi-island (French group) is using. Similar in the Caribbean where there is a local inter country currancy.

The entire SL was using the Solarian Credit and that (I believe) was forced on those system falling under the grasping hands of OFS. Easier to siphon off graft and extortion that way.

Look at the Talbot Sector- almost all those systems looking to enter it the agreement of annexation with SEM each had their own currency. Yes, there were exchanges between systems but mostly you had to provide funds in local currency. There is/was a negotiated conversion of local system currencies to Manticorian Dollars.

Some currencies are more stable that others so they are more often used pricing of products and commodities. Foreign Exchange --a whole other world.

I'd respectively submit that there is another caveat.
The Honorverse system is more like the pre international telegraph days. With long lead times between systems there would be options to make a killing if you got fresh exchange rates before the local market did.

Brigade XO wrote:So far in the Honorverse, the currency systems are sort of two tiered which actually is actually an analogy of what we see in 21 century Earth with a major caveat

in our present time, the major powers like the USA, UK, European Union, Russia, China etc have their own currency. To greater or lesser extents, those currencies and those such as the Japanese Yen have an active international market for the buying and selling of same. Also at the moment the Ruble of Russia is in trouble because of several economic pressures on that country.

When you get move out to the Honorverse, the major currencies are Solarian League, Star Empire of Manticore, Alderman Empire, etc and while there are market for the currencies they are used as the basis of payment and trade within those Star Nations. Typically, contracts and purchases are made in the currency of the Star Nation (or League) when people are buying there. ---this is NOT to be confused with the tourist impact with which people are using local currency (or "credit cards") to my things BUT because they are used to or want to be used to bringing in "tourist money" local merchants will accept multiple currencies s on a regular basie. Like much of the EU will let you pay in Euros, US Dollars, British Pounds --as you shift in the direction of Asia places will/ may take USD or Euros but not other currencies....they want to be paid in local currency. This does shift as you move down in size of country and its general economic strength. You go to Iceland and they really want you to use the local currency OR plastic. Depending on where you are there you MAY be able to use USD in places but others than the local currency you're usually only going to use Euros- and get your change back in Icelandic money. Part of that is the ability to convert foreign currency into something usable in the local country market. Part is that keeping up with foreign exchange rates (cell phone data plans and electronic transactions on credit cards with settle with "current" "buying/selling rates" in the electronic markets. SOME overseas possessions of France will accept Euros but usually they want whatever the local multi-island (French group) is using. Similar in the Caribbean where there is a local inter country currancy.

The entire SL was using the Solarian Credit and that (I believe) was forced on those system falling under the grasping hands of OFS. Easier to siphon off graft and extortion that way.

Look at the Talbot Sector- almost all those systems looking to enter it the agreement of annexation with SEM each had their own currency. Yes, there were exchanges between systems but mostly you had to provide funds in local currency. There is/was a negotiated conversion of local system currencies to Manticorian Dollars.

Some currencies are more stable that others so they are more often used pricing of products and commodities. Foreign Exchange --a whole other world.

Daryl wrote:I'd respectively submit that there is another caveat.
The Honorverse system is more like the pre international telegraph days. With long lead times between systems there would be options to make a killing if you got fresh exchange rates before the local market did.

Galileo (and others) infamously made money selling primitive telescopes to wealthy merchants so they could identify returning ships while still far outside the harbor, allowing the merchants to make financial moves on the expected cargos before their rivals even knew that the ship was returning.

Galileo (and others) made even more money NOT selling telescopes to the rivals of the first movers...

Daryl wrote:I'd respectively submit that there is another caveat.
The Honorverse system is more like the pre international telegraph days. With long lead times between systems there would be options to make a killing if you got fresh exchange rates before the local market did.

Arbitrage has been around for a very long time. Mostly it's a question of how you can coordinate your activities and continue to make a profit rather than get devastated in making a decision based on stale/incorrect/false information or not being able to execute your trade(s) in a timely manner either where you are or where you are making a remote trade.

It's not illegal till somebody makes a law/rule someplace that limits who can trade where and what can be traded. Of course you will run into problems if you can not cover your losses but that's another story. At various times and in various places, you could be charged with intent to manipulate prices or various other "fraudulent" efforts and face more than monetary consequences. Like Insider Trading......sigh. Just how did the husband of a Member of a House Of Representatives manage to make interesting investments on a security which the spouse was in the loop for on awards of government contracts before the announcement was public or even moved beyond the Corporate Board of Directors?....but I digress. It's a high risk business.

Of course, if your the telegraph operator who does the relay of the news between stations (across the ocean or somewhere outside a Star Nation spanning thousands of systems) that war has broken out, if you tell your cousin Jose about this and he buys commodity futures and or stock in relevant companies in major war materials or production, you can do the same thing.

Enter the telescopes to identify your own shipping (and private signals they will be flying) or carrier pigeons to your agents across national boundaries or things like the English Channel. Or you send instructions to your Embassy that it's needs to deliver a declaration of war to somebody's government but the your Embassy has problems generating the formal declarations so the target government doesn't get it tall AFTER the initial attack of the war doesn't come an hour or so earlier (when it wasn't actually soon enough to compromise the attack but would have been "before" the attack actually took place) so it was a Sneak Attack in an Undeclared War.

You want to trade any Solarian League system's corporate stock or commercial paper on the Manticoran Stock Exchange At Landing....go ahead. You just have to keep in mind that you are literally light-years away from most of what can affect the price of those investments.

Caveat: Unless operating in the MBS, the margin of profit is lower. In the MBS one can, as we say, make a killing. There is less risk or no risk operating in a system where you're getting your data in real time from the horse's mouth.

The MBS offers an opportunity to increase ones buying power by stretching the dollar.

Coupons were probably one of the first futures markets.

penny wrote:The MBS = Wall Street

tlb wrote:Do we really know as true that Manticore houses the biggest financial center in the galaxy? It is true that the Manticore wormhole junction spans a large amount of the periphery of the Solarian League. But only the link to Beowulf actually penetrates into the heart of the SL (which is where the greatest amount of financial activity takes place), so why wouldn't the financial center of the SL be in the Sol System - the center of the League government?

It certainly would have been in Sol before Manticore hit its stride and the Core Worlds of the League (except for those closest to Beowulf) are not connected to Manticore, which mainly dominates trade outside the Core.

I won't put words into your mouth, but you need to clarify your question. If by biggest you mean office space allocated, or groundside acreage allocated, then who knows. I don't think that is what you are referring to. But I would bet the farm that the SL’s financial center does not come close to the bottom line that is traded in the MBS at the end of each day.

House of Steel clearly states that the MBS has cornered the market on trade. How can that be true if the MBS does not have the largest trade by monetary volume? It is logical by nature. On Earth, everywhere there is a massive amount of water near a land mass, that landmass will showcase a lot of cities built around the sustaining nature of water. In those cities, the densely packed markets – stores, malls, eateries, gas stations, etc., – will always be located near intersections. Because intersections move lots of traffic. Interstate highways move even more diverse traffic. Traffic from around the country. So quite naturally, infrastructure and businesses will always see those areas of densely populated traffic as prime real estate. Lot rent prices and taxes will be higher, but the amount of business being conducted in such a busy area of town will more than make up for the cost.

The MBS has the same formula working for itself. It is a busy “interstate” junction seeing traffic from all over the galaxy. Quite naturally it will become the dominant trading post. The largest flea markets are always located near busy intersections.

I had a funny vision back in the “Did the MBS corner the market on trade” thread of there being a lot of undersirable “action” taking place in the MBS. Flea Markets in space? A freighter full of people shooting crap? LOL Gambling aboard certain freighters? Who knows what the MBS entertains in certain sectors, whether they like it or not.


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ThinksMarkedly wrote:I think it might.

One reason a financial centre is relevant is that its self-perpetuating critical mass: that's where most of the trade had happened, so traders have set up their branches or head offices there, which means that's where they will conduct their trades. That's New York today and this was the main reason it remained the biggest financial centre through the early 90s and early 2000s, when the speed of information was irrelevant across our world. Now, with High Frequency Trading, location becomes important again.

And that's the other reason I can think of for a given location to be relevant: travel time. And for 400 T-years, the MBS has been the best location to get all of the financial trades done, for the same reason that it has been the best for freight traffic.

So the question is whether there was a pre-existing financial centre that Manticore had to and has been competing with since the discovery of the Junction. That's probably Old Earth, given the massive population that existed there and being the capital of the League. But it might not, if the Final Wars wrecked the Sol System economy sufficiently that by the time the League was formed, the financial system was elsewhere. So long as that other system wasn't Sigma Draconis, then the MBS has probably been gnawing at the prominence of whatever system that was.

And like New York before it, all travel is not equal. There was much more traffic in the North Atlantic, either by boat or by plane, or electronically via telegraphs and telephone, than anywhere else in the world. And so I think penny is right that conducting trades in the MBS gives traders first mover advantage (and time is money), so the financial centre of the HV should have moved there over those 400 T-years.

And if the financial centre prior to the MWHJ was Beowulf because the Republic of Beowulf's economy was in such a better state when George Benton launched his expedition to save the Sol System from itself, then there's absolutely no doubt that the HV financial centre is now the MWHJ itself, with access to all (now) 7 systems within the hour. Even more so with the Hermes Buoy system running.

Exactly.

tlb wrote:It is precisely because of the so-called trade advantage that I question this point. We know from the author that the Core Worlds of the League are massively wealthy and the Manticore Wormhole Junction offers zero trade advantage for transactions between the Core Worlds.

The SL's wealth is a bit misleading in one very important aspect. House of Steel says “It is the junction which gives the citizens of the Star Kingdom the highest per capita income of any star nation – including the Solaria League – in history.” You posted that as well. In other words, the citizens of the Star Kingdom are richer than the citizens located anywhere else. What does more money available to its citizens normally mean for a country? A healthy, vibrant, buying and selling economy. BTW, the SL probably stifled its own economic growth with the graft and greed of OFS. I would not be surprised if certain systems in the SL hid assets in “offshore” accounts located in the MBS.

Anyway, slow down there! You are trading the cart before you trade the horse. The MBS fuels the trade between the Core Worlds! Even if the Core Worlds get its market data more slowly, it does get its data, eventually. People who own stock and commodities – precious metals and so forth – watch the data closely. If you own precious metals and commodities, stocks and bonds and you don't have an eye on the ticker tape, you're a fool. That includes private citizens and big businesses. Those big businesses includes your personal invester, insurance companies, etc. IOW, the SL's personal fortunes are tied up in the MBS whether they like it or not.

Of course there is trading going on locally. And there is nothing stopping a private citizen from selling stock or precious metals to another. But there will always be informed buyers and sellers who keep an eye on the market. Some people speculate and buy seemingly worthless or devalued or failing stock in hopes that it will recover. Recall that Bitcoin was once trading for $0.00099! It was hard to give them away. But speculators bought them.

I am seeing a pattern of disconnect. There has always been and always will be local markets. Local markets run the gamut of flea markets, grocery stores, malls, hardware stores, car dealerships, vegetable markets, meat markets, etc. In addition to local financial centers which are found even in most small towns in the form of your local bank. Banks are a good place to dabble in the market. Certificates of Deposit (CD), annuities and mutual funds are aggressively marketed. These banks have bidding wars with each other offering various rates and benefits. These benefits are based on the data coming out of Wall Street and the success of these banks trading using the data coming out of Wall Street.

What everyone seems to be missing is that it does not matter how large the SL is as far as where the most important trading center will be located. Size does not matter. Location matters. Also, the massive size of the SL demands that it is more dependent upon the MBS for trade than anyone else ever will be.

Let me clarify that statement. The SL certainly does not need to trade with the MBS at all… as far as perishable items, and that probably applies to all manufactured goods as well. I made that statement myself in the Did the MBS corner the market on trade thread. As a matter of fact, I think the author made it clear that mostly all systems are self sufficient. Why wouldn't they be if they are truly a class M planet without some hidden nasty surprise like Grayson. But that does not mean a system cannot benefit from the trade of tangible goods for whatever reason.

But let me make this clear. The SL may not need to trade in the MBS as far as tangible trade. But as far as intangible trade like stocks, certain commodities, etc., it needs the MBS more than anyone else ever will; with the exception of Manticore itself. That's a personal observation, mind you.

An entity as large as the SL needs to manage its spending. It needs to seek out the best deals and manage its profit and lost margins as best it can. The SL literally cannot afford to forego trading in the MBS if it wants to adequately maintain and control its costs. And it certainly cannot remain in business going up against other ventures with the power of the fresh data coming out of the MBS. Insurance companies in the SL would fold going up against foreign businesses that operate out of the MBS. Since the SL hates Manticore for cornering the market on trade, why doesn't the SL simply boycott or ignore it? Because it can't. Galactic markets count on the data that fuels it. Remember, the MBS does not simply corner the market on trade. It also corners the market on data. The MWJ corners the market on interior lines of communication. They've got data coming in from all over the galaxy.

Conduct a simple mind experiment. Try to fathom the many systems that comprise the SL. Now imagine that on every planet there exists an invester with the clout of Honor's Willard Neufsteiller. You can bet that all of the Neufsteiller’s around the galaxy are strongly plugged into the data coming out of the MBS. Deals are being brokered with this data in hand. The best deals are made in the MBS itself. It is akin to being at the grocery store yourself and seeing that day’s sale on soft drinks. Since you are physically there, you can maximize your profit and saving. A business that deals in soft drinks can too. And they often do. That is why most stores have a strict limit of two per customer. If not, a local business will certainly buy the entire lot. But if you are not physically present in the system then you cannot take advantage of the windfalls. However, someone else is going to take advantage of it, and if that business is a competing business of yours then you will feel the squeeze.

Anyway, back to that mind experiment. Imagine every private financial investor, and each analyst of each insurance company, of banks, of hedge funds, etc., etc. , etc., connecting a rope to their ship and traveling to and from the MBS (which they must do). Now imagine the interconnected and crisscrossing ropes that tie systems together financially! To compete, professionals must be present in the MBS so they will be able to broker the best deals possible. Call it bulk buying if you will. One cannot buy in bulk or broker in bulk if one does not have today's sale paper! As Daryl said, “one can make a killing.” And avoid being killed because your competitors operate out of the MBS and you don't.

Imagine the maze of crisscrossing and interconnected rope. Simply mind boggling.

Jonathan_S wrote:I can't recall anything in the books about that.

Planets will certainly have their own local stock markets -- but I strongly suspect that the Honorverse has gone back to the pre-telecommunications markets for any interstellar investing. If you want to day trade, or run high frequency trading in a given market you'll have to there (or have a trusted agent there); it's the only way to cut the latency down to something usable.

There's simply no way, even if dispatch boats left every 10 seconds (so completely monopolized all transits through the Junction) to do quick reaction trading (like parts of Wall Street does today) between systems in the Honorverse.

The shortest possibly round trip latency from the closest pair of systems would be Manticore and Beowulf. FTL comms to the Junction (7 minutes), dispatch boat through to Beowulf (at least 10 seconds, but more like 60-120), then another 7 minutes of FTL comms to get to Beowulf. So you're looking at more than half an hour for someone on Beowulf to see a stock moved, issue a buy (or sell) order, and that order to return to Manticore and get executed. And that's the very, very, fastest lag possible.

Manticore and Sol would be more like 14-15 days round trip by dispatch boat. At that point, from that time delay remove, you can only really trade on fundamentals because by the time you hear and can react the market has long, long, finished moving. So if you want to ability to react then you trade in just your local planet's market, you move to the market you care about trading in, or you have a trusted agent trade in that market for you.


So, no, I don't think there are even hundreds of dispatch boats a day heading through the Junction carrying stock information and orders. The data transmission delays mean the market trades simply can't work like they do now and traders would have had to long ago adapted to that.

Sure there is a way to do quick reaction trading in the HV. The same as it was in the 19th Century. You have an agent in the system with authorization to buy or sell within a certain range. Besides, there is a certain thing called “spot” buying. Spot buying is like it sounds. You buy a certain commodity at the price on the spot, which locks the commodity in at the price of the spot at that time. It is a good thing if the price rises or maintains. Not so good if the price falls. What people seem to miss is that the same mechanisms and terminology exists in the HV that were created in the market even before the 19th century.

Futures contracts were created in the 19th Century to assist in hedge buying. Hedging in simple terms is buying to offset or minimize your risk. Betting on a sports game to win big, while simultaneously betting on a sure thing to offset the bottom line of a potential loss is one form of hedging. Hedging can take on many forms.

I disagree on the frequency of boats. If boats are not entering or leaving the MBS on a daily basis, then trading in Company X’s stock could be going on for days or weeks while Company X has gone out of business. In the HV that is as unavoidable as it was in the 19th Century and prior. But the market exists by getting that data out ASAP. So the market in the HV would be dependent on boats leaving frequently on a timely schedule. Every 10 seconds would not be necessary. Every day or every several days would. Any market will adjust to its own frequency. It is just that one cannot make a killing unless one travels to where a killing can be made.


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Brigade XO wrote:Manticore had developed into a financial powerhouse but it is not operating in an analog of Earth in the 21st century with almost global electronic transaction capability between major cities---your looking at more in the frame of late middle of the 19th century and before the advent of telegraph communications and certainly before trans-oceanic telegraph cables.

Why? Because the movement of any data was depending (before trans-oceanic cables and telegraph on land) on horse mounted couriers or mail services on land and shipping on oceans. If you were in London before underwater cables and various European telegraph coverage, you could trade in the London stock market on non-English stocks but you were behind the curve on anything not in London. Oh, you could buy and sell securities issued from anywhere in the world but you bought or sold based on what the LONDON MARKET knowledge of prices were and that could be days to weeks or months behind what was happening in Paris, Berlin, China etc. Or in the US which was a sailing trip across the North Atlantic until steam powered vessels got into the mix. Reuters was a pioneer in moving data across the English Channel using Carrier Pigeons to take very important information across the Channel as well as between various European cities- for breaking news and for at least some customers important financial data.

Depending on Manticorian Law and the rules of the Manticorian Stock Exchange, someone in another star system might be able to buy and sell shares of companies originating in the League (or anywhere else) BUT you are automatically constrained by the age of financial data and "news" that could impact the price of those issues. You might buy a stock for $100 Manticor Credits a share when it was actually trading at the equevenlt of 50 (or 10) Manticore Credits in New Chicago and have lost 90 cr a share when the trade settled on Manticore. The reverse is true so you see why hyper-current (and private knowledge) information is critical.

Manticore has a LOT of money and people who are making more. Just the Junction fees is massive income. But if your buying securities were any news is a few days or weeks (or longer) away from reaching you, you just have to live with the market risks.

Wall Street "derivatives". When you take a financial obligation (like a mortgage loan or a 2nd mortgage loan) and bundle it up with a whole bunch of similar obligations, you can sell an ownership interest in that bundle as an investment to people. What you are selling is SHARING of the repayment over time of the principal and interest ON THE THE DEBT OBLIGATION(S) INVOLVED. Lenders will do this to get back the principal on the loans (having gotten them off their books) to be able to keep lending---[Bank capitalization and loan to equity/captial rations by Federal Government Banking System) So....say 3000 mortgages at an average of $150,000 each and an average interest rate of 7% made by 20 banks in a 6 month period. The packaging organization [doesn't have to be the originating bank and this was being done by 3rd parties) typically pays a serving fee for handing the mortgage payment and applying them agains the loans in bookkeeping plus sending out the appropriate repayment on the investment to the holders of the shares of these packaged loans. One (or two or three) tiny problems- loans can have late payments, get delinquent and the borrower(s) may go bankrupt...."POOF", no repayment of principal and interest. And since this is real estate, various towns, Counties and States have TAXES that are do to them on said properties and if those don't get paid----they foreclose on the property for delinquent taxes and there NOTHING (even if you can identify a particular property) that you could get that had any value as collateral.
Now.... some brite (or perhaps devious) sparks split the packaged loans into segments based on downpayment (and so loan to value) breakdowns of loans so they are not selling one set of shares on the "new" investment instrument but several- of varying degrees of risk (said loan to value of collateral and credit worthiness of original borrowers) and suddenly you have a lot of investment offerings that CAN become essentially worthless because the housing market and also the economy is downturned or crashing. And you as the holder of "derivatives" have exactly nothing that might be sold (like a house) as actual collateral and you loose your investment. Sound like a bad deal? Yup. You create something, sell it and if it becomes worthless the buyer looses.

Again, spot buying was used even in the 19th Century. Or “Futures.” What the MBS does, is gather in data from all over the galaxy to be utilized together in a more powerful equation for analysts, or speculators, etc.


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tlb wrote:While I expect that you were right about the rules and procedures governing a financial marketplace in the Honorverse; the question is not whether Manticore was A financial powerhouse. Instead, it is whether it was THE financial powerhouse. The quotes show that Manticore's wealth was insignificant compared to that of the League's Core Worlds; therefore why wouldn't the primary financial market that services the Core Worlds be closer to them?

Jonathan_S wrote:I would think the information delays are such that any core world's primary financial market would be its own domestic one. (as Brigade XO pointed out, pre underwater cables the main market for England was London, for France it was Paris, for the Netherlands it was Amsterdam).

Their economy is more than large enough to capitalize their own domestic firms -- and their (large pool of) domestic investors wouldn't want to be trading at a time disadvantage if those domestic companies stocks were instead primarily trading on the MBS market - where investors on Manticore had a couple days lead time. (The only advantage the domestic core investors would have is if local news broke about the local company their buy or sell orders might be riding on the same courier boat that carried that news to Manticore)

Now I could see Manticore becoming the primary financial market for some of the surrounding verge systems. Access to the vastly greater capital, and therefore better chance to attract outside investment, could be well worth subjecting your domestic companies' stock to the vagaries of a market that's days away from you.

Any system's primary market would be its own local market. Why would that change? One's local market is simply driven by the prices of the galaxy. Just as your local supermarket's prices are subject to the fluctuating prices around the country/world. Prices trickle down or up. It is just good to be ahead of the trickle if one can.

The difference between an invester and a gambler is data. An invester does not always gamble, but a gambler does.

penny wrote:The SL may not need to trade in the MBS as far as tangible trade. But as far as intangible trade like stocks, certain commodities, etc., it needs the MBS more than anyone else ever will; with the exception of Manticore itself. That's a personal observation, mind you.

An entity as large as the SL needs to manage its spending. It needs to seek out the best deals and manage its profit and lost margins as best it can. The SL literally cannot afford to forego trading in the MBS if it wants to adequately maintain and control its costs. And it certainly cannot remain in business going up against other ventures with the power of the fresh data coming out of the MBS. Insurance companies in the SL would fold going up against foreign businesses that operate out of the MBS. Since the SL hates Manticore for cornering the market on trade, why doesn't the SL simply boycott or ignore it? Because it can't. Galactic markets count on the data that fuels it. Remember, the MBS does not simply corner the market on trade. It also corners the market on data. The MWJ corners the market on interior lines of communication. They've got data coming in from all over the galaxy.

What text evidence do you have for your statements? Here is text showing the trade within the Core worlds was enormous and lucrative (contrary to speculation by some in the forum) and there is no reason to assume that the MBS had any effect on it. They do not need data from the MBS.

The Solarian League was the largest, most powerful, wealthiest political entity in human history. On a per capita basis, the Star Kingdom's economy was actually somewhat stronger, but in absolute terms Manticore's entire gross domestic product would disappear with scarcely a ripple into the League's economy.

From Honorverse fanwiki:

The inner systems, or Core worlds, were the first hundred or so colonies settled from Earth and many of them had populations larger than ten billion.

Core systems and core worlds were among the most wealthy and influential of humanity's population centers. The Core trade was extremely lucrative. (SI4,CS2)

Here is the actual quote from Torch Of Freedom:

Chapter 38 wrote:For some considerable part of that pre-Station life, she and her husband had been very successful freight brokers. That was how they'd amassed their initial small fortune, which Michael Parmley had then parlayed into a much larger fortune playing the Centauri stock exchange—and then blown the whole thing trying to launch a freight company that could compete with the big boys in the lucrative Core trade.

From More Than Honor the combined population of the MBS worlds was about 3 billion, so a given Core world could have an economy that was 3 times greater than Manticore and still have a per capita basis that was only about 90% that of Manticore.