I'm a fan of free markets and I'll be the first to admit that it's nonsense to have a black and white perception of the world. It's not either 100% free markets or state-driven economy. There's a huge world in-between both extremes. Being a fan of free markets simply means you err towards one side more than the other.

Having common sense regulations and tools like circuitbreakers are fine with me. I wouldn't say it's meaningfully less of a free market just because we have these tools in place to protect us against the automation we use.

Agreed. This is by far the most reasonable post I read today.

The stock exchange is privately owned, the owners/management of the NYSE and other exchanges chose to implement circuit breakers like this. The exchanges still have to operate within the bounds of regulations, but nothing is stopping Joe Blow (other than capital, expertise, navigating regulations, etc.) from setting up his own stock exchange that doesn't have any circuit breakers put in place to prevent flash crashes.

The SEC would indeed stop Joe Blow from setting up his exchange in a way that skirts regulations.

> from setting up his own stock exchange that doesn't have any circuit breakers put in place to prevent flash crashes.

If you are facilitating the trading of regulated instruments this is wrong and there are indeed SEC regulated circuit breakers you will have to implement.

"Free market" doesn't mean "no government regulation". It means that the market responds purely to supply and demand. Government regulation can distort the response of supply and demand, but so do monopolies and lack of information parity between buyers and sellers. From what I've been reading here, the trade halts help prevent a situation where prices are effectively unknown because there are not enough buyers. Such a system is not a "free market" because information is not communicating between buyers and sellers. It sounds like the timeout helps people who want to buy stop panicking and discover what price they are willing to buy. Effectively it gives time for price information to get transmitted across the system. This actually helps restore free market. (Other government regulation, like trust-busting can also have this effect.)

These rules are completely in keeping with the free market.

Would you care to elaborate? I would argue that guard rails and controlled falls are in opposition to actual free market. The qualifier 'completely' seems misplaced.

These rules are chosen by the participants. By the owners of the property. They are not government imposed.

Consider an analogy. Suppose you were a stamp collector and you wanted to run a weekly stamp exchange. You and your fellow collectors may establish rules about how the trading should happen and the agreed upon behaviors. By-laws if you will. You could of course have no rules. Or you could choose some that promote the overall longevity of the venue and that encourage robust participation. The choice is up to the owners. Both are free. But one will be more successful than the other.

Sure, but I think it makes sense to say that one market is more free than another, even when neither is controlled by a government. In many cases the reasons why it's good for governments to allow free markets are also reasons why its good for private entities to allow free markets.

Free markets are about voluntary interaction. This is a group of people deciding the rules that they'll trade with voluntarily. There's no reason the hours are what they are - the market could be open 1 hour or 24 -- deciding the opening times doesn't not mean it's not a free market.

Hmm, the problem with analogies is that they are analogies. I don't think NYSE or ICE has the same kind of impact on the market as a stamp collectoe. Hell, NYSE is almost literally the market. Thus any rules enforced by it are, for all practical purposes, market rules. They may agree with themselves that saving the market is the right thing to do, but guiding it does not make it free. It makes it not free.

The stock market is a privately owned entity that does not represent the broader market referred to in the phrase “the free market.”

You would argue that rules set up by private institutions are in opposition to the free market?

Even anarcho-capitalism doesn't go that far.

I think you are misrepresting my argument and attempt to dismiss it in an odd way.

I am arguing that rules set up by the market do not automagically enforce free market. I am arguing that rules explicitly do the opposite by introducing guard rails, which DO restrict movement in that free market.

Do you honestly believe that rules derive its effects from who sets them up?

To be perfectly honest I’m not sure I find your argument coherent at all.

Can you define what you mean by free market? Is two parties freely coming to a mutually beneficial agreement that they are then constrained by (i.e. a contract) consistent with that definition?

It is possible I have not made it very clear. For the sake of the argument, I am ok with the definition presented by you.

That said, I am not sure what you disagree with. Please elaborate.

Two private parties, an exchange and individual trading firms, have freely agreed to a set of rules in order to transact on that exchange. What about that is not consistent with the free market?

Well, first I would like to point out that in your example there are three parties with the exchange being the intermediary and trading firms transacting.

Assuming you agree with my characterization, on the surface nothing about the transaction facilitated by the intermediary makes it not consistent. You have my full support here.

Now, your argument appears to revolve around knee jerk reaction to me saying that in real free market, the rules would not artificially prop the market. My argument is that in a true free market, the rules would not restrict it arbitrarily.

Ergo, we do not have a truly free market, but just a reasonable approximation agreed for by various parties.

Would you accept that?

> Well, first I would like to point out that in your example there are three parties with the exchange being the intermediary and trading firms transacting.

The agreement to restrictions is still between two parties, but you can read it as "two classes of parties" if it makes you feel better.

> Now, your argument appears to revolve around knee jerk reaction to me saying that in real free market, the rules would not artificially prop the market. My argument is that in a true free market, the rules would not restrict it arbitrarily.

It seems like you're confused about a couple of concepts here and I think it may stem from overloading the words "free market" and the concept of "the free market" generally.

The stock exchange, like any real world marketplace, has many restrictions on trading. These make it a market that is not free in the sense that you cannot trade however or whenever you like. However, the free market is a distinct concept from any individual exchange. It means that parties involved in the open market (i.e. everyone) are able to freely exchange goods and services as they choose. This may involve entering into agreements (like contracts) that restrict future actions, but as long as those agreements are freely agreed to, this is still consistent with the concept of a free market generally. Thus, the fact the stock market has restrictions is still consistent with the concept of a free market so long as the participants freely agreed to those restrictions.

Does that clear anything up?

I think I am willing to concede to on the free market being an overloaded term the way I used it.

I will sleep on it a little, but thank you for trying to clear it up for me.

The reasons for that, both in private institutions like stock exchanges, and in terms of regulation, have mostly to do with how hideously volatile 'freer' markets tend to be, and the frequent, devastating effects banking crises, panics, etc used to have.