Well, even outside of trading, the trend is always lower cost and better service. Thats how we compete. So the long term trend in this business is lower rates, and better service. Technology has gone a long, long way in the last 6 years and rates are down by multiples. I don't hear many traders complaining that speed, reliability and service are WORSE than in 1999. At the same time, it costs much much less to clear. So.....it all has to start somewhere........
When the first firm can cut their rates and maintain great service, unless other firms evolve quickly, that first firm dominates. We don't have one firm precisely because other firms are willing to figure it out and compete.
If you cut rates, but operate your business poorly, then you can't compete cause in the long run you lose customers. I am not talking about trading through these firms, obviously. I am talking about the firms that find a way to add value and lower cost at the same time.
Refer to the thread of GM (General Motors) demise. Why do you think they are losing money? Well, they stopped producing a large percentage of cars, and produce mostly SUVs. At least now, SUV sales are plummeting, GM doesn't produce a value added product right now.
This business model worked well when all the suburban housewives could convince Hubby that they all "needed" an H2 to drive little Johnny to school. That was before the breadwinner observed the increase in gas prices. For those of us who don't feel a pinch with prices, of course this won't apply, but for the masses in the US, it does apply.
While this may be short term, the market dictates the result without ambiquity. Sure, you could say,"Well, I pay more to drive an SUV becuase is the biggest thing on the road, and I value safety." Nobody says you are wrong, but for GM now, its a losing way to conduct their business. And to move from point a to point b, as the price in gas trends upward, some might argue you pay a premium over what you really need.
