"High-speed stock trading fuels market swings, worry" by Graham Bowley New York Times / October 9, 2011
NEW YORK - Regulators in the United States and internationally are cracking down on computerized high-speed trading that crowds today’s stock exchanges, worried that as it spreads around the globe it is making market swings worse.
The cost, critics say, is the confidence of ordinary investors in the markets and, ultimately, their belief in the fairness of the financial system.
“There is something unholy about them,’’ said Guy P. Wyser-Pratte, a prominent longtime Wall Street trader and investor. “That is what caused this tremendous volatility. They make a fortune whereas the public gets so whipsawed by this trading.’’
Regulators are playing catch-up. In the United States and Europe, they have recently fined traders for using computers to gain advantage over slower investors by illegally manipulating prices, and they suspect other market abuse could be going on. Regulators are also weighing new rules for high-speed trading, with an international regulatory body to make recommendations to global leaders in coming weeks.
The whole U.S. financial system is a CRIMINAL CASINO!
In addition, officials in Europe, Canada, and the United States are considering imposing fees aimed at limiting trading volume or paying for the cost of greater oversight.
Perhaps regulators’ biggest worry is over the unknown dynamics of the computerized stock market world that the firms are part of - and the risk that at any moment it could spin out of control.
Some regulators fear that the sudden market dive on May 6, 2010, when prices dropped by 700 points in minutes and recovered just as abruptly, was a warning of the potential problems to come.
That was a warning from foreign creditors that the mortgage-securities shit they sold would be bought back.
Just last week, the broader market fell throughout Tuesday’s session before shooting up 4 percent in the last hour, raising questions on what was behind it.
It was the PLUNGE PROTECTION TEAM rigging the market!
“The flash crash was a wake-up call for the market,’’ said Andrew Haldane, the executive director of the Bank of England responsible for financial stability. “There are many questions begging.’’
The industry and others say that the vast majority of trading is legitimate and that its presence means many extra buyers and sellers in the markets, drastically reducing trading costs for ordinary investors....
This the same industry that looted everyone over lies?
The trading, done by independent firms or on special desks inside big Wall Street banks, now accounts for two out of every three stock market trades in America....
Then the stock market as barometer of the economy is a lie.
Even the traders’ authorized activities are coming under fire, especially their tendency to shoot off thousands of buy or sell orders a second and suddenly cancel many when their strategy for that stock changes. Long-term investors like pension funds complain that the practice makes their trading harder.
The Securities and Exchange Commission has been looking into the new market structure for almost two years, seeking comments from investors and other major players. In July, it approved a “large trader’’ rule, requiring firms that do a lot of business in the markets including high-speed traders to offer more information about their activities in case regulators need to trace their trades.
Oh, the SEC is on the case. We are all saved.
After the flash crash, exchanges introduced circuit breakers to halt trading if stock prices move violently. Bart Chilton, a commissioner at the Commodity Futures Trading Commission, this month called for regulators to go further. He wants compulsory registration of high-frequency firms and pre-trade testing of their algorithms to make sure they won’t go out of control.
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Related:
"Ex-staffer indicted in software case" by Bloomberg News | February 12, 2010
NEW YORK - A former Goldman Sachs Group computer programmer, Sergey Aleynikov, was indicted yesterday on federal charges that he stole trading software from the bank.
Aleynikov, 40, was arrested July 3 and charged with theft of trade secrets and transportation of stolen property.
Related:
"Goldman's "secret" isn't a secret at all. Their program trading system, dragged into the light by the arrest of a former programmer, churns the market constantly, capturing a few dollars here and there as the price of targeted stocks fluctuates, raking in $100 million a day for which nothing of value is given back. It is legalized looting on a scale that makes Bernie Madoff's scams look like stealing a few coins from the collection plate. And all of this is paid for by the traders who are not allowed to use programs, the investors who get to the trade windows a second later than Goldman Sachs, and of course, the actual companies being traded." -- Wake the Flock Up "
“Proprietary information and trade secrets are sometimes the most valuable assets of a business,’’ FBI assistant director-in-charge Joseph Demarest said yesterday.
The proprietary code, worth millions of dollars, lets the company do “sophisticated, high-speed and high-volume trades on various stock and commodities markets,’’ prosecutors have said in court documents.
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