OlsenBlog

In recent months, stock exchanges have come into the public spotlight for their business practices. The introduction of flash orders that give preferential treatment to a certain group of customers has undermined public confidence in stock exchanges as institutions that vouch for fair market prices. The introduction of flash orders happened in the wake of a development that has received little publicity. There is a growing scientific literature in finance that explains how market prices depend on the details of the order flow and how traders can influence market prices. An increasing number of market participants take advantage of these discoveries for their own and their investors’ advantage…

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Author: Richard B. Olsen, Founder and CEO of Olsen Ltd

Modern society is divided. On the one hand people have access to advanced technologies in medicine, computers, Internet communication and mobile phones. We make telephone calls around the world from one remote place and frequently do things that appear miraculous. On the other hand, many face abject poverty; one half of the world population subsists on an income of less than USD 2.50 a day as measured in 2005, see World Bank Development Indicators 2008. This is not all; there are other negative factors, such as profligate use of non-renewable resources, large loss of biodiversity, pollution of the atmosphere, and chronic armed conflict and suppression of human rights in many different areas of the world. There is a mismatch: We need to redress the imbalance between technological prowess and poverty and bring the global economy into sync with the environment…

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By: Richard B. Olsen, Founder and CEO of Olsen Ltd

Today, we use technologies on a regular basis that only 20 years ago appeared impossible. If you had told anyone in the 1970s that today’s world would boast an installed base of more than 1 billion of personal computers, this would have been viewed as utopia. Or who predicted ten years ago that mobile phones would exceed 3.5 billion by 2008? For that matter, nobody expected that Moore’s law of doubling of computing speed every two years stipulated in 1964 would still hold true in 2009?

In technology, we have been able to exceed our wildest expectations, so why not try to achieve the same in social issues? The contributions to the economics section of the blog will span a wide range of areas that are critical for such an endeavor…

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By: Richard B. Olsen, Founder and CEO of Olsen Ltd

The interest rates associated with individual currencies are one of the most obvious yet least-understood forces in the foreign exchange marketplace. Their most negative effects capture public attention during carry-trade bubbles, such as the recent (summer 2007) rise—and then abrupt fall—of the New Zealand dollar versus the Japanese yen. But day-to-day, currency traders are misled by a broken market mechanism that encourages pricing to skew away from any connection with reality.
In the following interview, Richard Olsen, co-founder of OANDA, discusses this little-understood issue. The solution he recommends—and has put into practice at Olsen and OANDA, the prominent online forex brokerage he founded in 1995—is continuous interest-rate payment, second-by-second, on all open positions.
Continuous interest makes the yield component of every currency transaction real. In a marketplace where fundamentals are few and far between, and where pricing tends to lack any fundamental frame of reference, continuous interest will help stabilize markets and enable incremental intervention to avoid valuation free-falls…

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