Bourse is a funny word isn’t it? What exactly does it mean and why do people keep referring to the Zillow Mortgage Marketplace as a Bourse?
Bourse: \ˈburs\ Function: noun
Etymology: Middle French, literally, purse, from Medieval Latin bursa — more at purse
Date: 1597
1: exchange 5a; specifically : a European stock exchange
2: a sale of numismatic or philatelic items on tables (as at a convention)
Wikipedia equates a bourse more generally to a stock exchange. This seems to be the connotation meant when Zillow Mortgage Marketplace is referred to as a Bourse: an open marketplace where pricing is transparent.
Hogwash… or more accurately: Pork Bellies.
I was an options trader on the floor of the Chicago Board Options Exchange. That means I stood in a pit with other traders and made the market for various options on various stocks. (I reiterate this to make clear my bona fides). When a broker (representing “the public”) came into the pit and yelled out an option strike, my job was to have the best bid/ask and be FIRST. If I accomplished both goals, I got to do the trade. If someone else was tighter or faster… he/she got to do the trade. This is the most transparent, open market type of bourse that exists. How does Zillow Mortgage Marketplace compare to this? Not even close.
There are more than a few discrepancies, but let me cut to the chase: In a transparent exchange, whether it be a pure “open market”, “open out-cry” system like in Chicago or the “license to steal” that goes on at the New York Stock Exchange, one thing remains true: the underlying commodity is fungible. One share of IBM stock is interchangeable with another share of IBM stock. One call option is interchangeable with its mirror strike and expiration date call option for the same underlying equity. Its nature does not change based on who buys them or who sells them. This is a bourse.
MORTGAGE IS MORE FUNGUS THAN FUNGIBLE
Now you might say that all 30 year fixed rate loans are fungible, but they are not. A lot more information must be presented before claiming two such loans interchangeable. Read more