Fractions to Save the Fractious Market

Eleven years after abandoning 1/8s and 1/16s, the SEC is considering bringing fractional prices back to the market, at least for less liquid stocks. Fractions, while considered an anachronism of old computing, used to prevent specialists and insiders from front running. Now they may be the cure we need against rapid trading. Trading in fractions bigger than decimals (cents) makes it more expensive to jump the queue in the limit-order book, perhaps making it fairer for slower small investors.
Ban calculators and let's start teaching fractions again in grade schools... Wait! Do the teachers know them?

The Student Loan Crisis Gets Worse

According to a new study, the average student who graduated in 2011 had $26,600 in student loans and 37.8% of graduates worked in jobs not requiring college education. The default rates hit a 14-year high. New Hampshire students had the highest debt load at $32,440, followed by Pennsylvania, Rhode Island and Connecticut; Utah had the lowest at $17,227, followed by Hawaii, California, Arizona and Nevada. 96% of students in private for-profit universities took out student loans borrowing 45% more than students at other colleges. Medical students debt levels are over $100,000 with students choosing lucrative plastic surgery over obstetrics to be able to pay that off. The total student debt has surpassed $1 trillion. Why is this happening?
Explanation 1. Economic crisis, governments slashing budgets lead to rising tuitions. Loan programs are complicated and students don't even know how much they owe.
Explanation 2. Overabundance of student loans at low cost leads to mispricing of default risk and misallocation of investment into what in Utah someone called degrees to nowhere", instead of into STEM fields (science, technology, engineering and math). Universities and for-profit colleges soak up the cash. Costs rise. Notice the parallel to the subprime housing crisis. Scary since the student debt bubble has not burst yet.

London to Tighten Rules on Listing

The WSJ reported today that the Financial Services Authority will raise the free float bar on listing shares in London. In May 2011, Glencore IPOed with only 13% of free float. Last year, Kazakh miner Eurasian Natural Resources ousted three directors who jointly owned 45% shares. London's reputation has suffered in recent years as many energy companies from Eurasian emerging markets managed to list through reverse takeovers or with minimal floats. When the free float (shares freely traded) is small relative to the total cap of the company, minority (public) shareholder rights are at risk. In China, foreign companies are minority shareholders by law. Recently, US companies learned the bad habits too. Instead of restricting float, they turned to supervoting shares (Zynga, Google, Facebook). Not good at all. If you want other people's money, you need to be willing to submit to their voting rights.