[jerf]

I'm not sure if they're planning this or not, but one thing a new exchange could do is quantize the trading. I have seen serious suggestions that having trades execute only on the hour, or even as radically as once per day, could perhaps significantly reduce the short-term focus of the stock. The idea here is to greatly reduce the influence of the stock's price movement on its own price. Since that sentence probably looks like a typo, let me say it another way: Stock prices react to information, and one of the loudest and most continuous bits of information is the stock's own minute-by-minute motion, far dominating things like "press releases", actual news, or quarterly reports for which it is sensible to see significant motion on the stock price.

Even if people set up the inevitable backchannels or side markets, the fact that shares can only change hands once per day may still have a significant impact on the shape of the market, even if it isn't perfect.

[heavenlyhash]

I had the pleasure of attending a talk about "Combinatorial Auctions"[1] lately which describes some interesting market designs that might apply here. In particular, there are some designs out there for "multi-round" auctions, and some great reading on how those work out. On-the-hour trading schemes would be essentially the same.

I can't find slides for the talk (just [2]), but there's also some really interesting publications reviewing outcomes when auctions like this were used to deal out resources to big companies who really had an incentive to do their math: http://ftp.cramton.umd.edu/papers2000-2004/cramton-schwartz-...

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[1] http://sessions.minnestar.org/sessions/336

[2] http://markgritter.livejournal.com/747077.html

[WorldMaker]

In addition to the speed of trades in the market itself is also some determination of the reporting structure of companies within the market. It's taken as de facto market requirement in the existing markets that companies report earnings to shareholders not less than once per quarter year (if not attempt to produce dividends to shareholders each quarter on the dot). Shareholder expectations of those quarterly earnings reports drive a lot of business decisions and subsequently a lot of business thinking seems to be driven by "quarterly thinking" where they'll make decisions that are dumb in the long term but will gain shareholder kudos in the immediate quarter.

I would think that a long-term-focused market could also attempt to control and slow down things like earnings reporting periods and expected investor dividend earnings pay out timings.