They monitor everything from the ratio between commissions and account size to excessive trading in penny stocks.
Morgenson argues that excessive trading is responsible for the increased volatility of the market.
The rationale was that because these funds were very large and liquid, excessive trading would not harm shareholders.
The funds are not intended for market timing or excessive trading.
Never mind that excessive trading almost guarantees subpar investment performance.
They found that one important determinant of excessive trading was gender.
They also find that this excessive trading reduces men's net returns by almost a full percentage point.
Some economists have advocated a tax on transactions as a way to curb excessive trading.
But tax barriers already exist that discourage excessive trading.
One is to avoid excessive trading because transaction costs "will eat up profits."
