Computer Trading and Dark Pools

Bob the Super Hamste writes "CNN Money has an article on computerized trading; specifically, the non-public markets that are often used to execute orders. The company that the article discusses executes 1/8 of all stock trades in the U.S., or about 900 million trades a day. For comparison, the NYSE executes about 700 million trades. The article discusses 'dark pools,' or private markets where quotes aren't disclosed to the broader public markets. If the company is unable to fill an order from within its own dark pool, it will submit the order to the broader public market (13 public exchanges), as well as up to 20 other private dark pools. The quotes offered by the private dark pools, by law, have to be the same or a better quote than those offered on public exchanges. There have been recent questions about whether the quotes provided by dark pools have been the best for customers and there is a current investigation by FINRA into the methods used by market makers and dark pool operators to fill orders."

Comments

If the question is:

[i kan reed]

If the question is, "are financial institutions doing the end run around public or private regulation for the purpose of screwing people, engaging in fraud, and dodging (necessary) liability?" the answer is always yes.

Re:If the question is:

[dintech]

Actually it's doing an end-run around exchange fees and showing your hand to the market. All trades are publicly reported anyway, just not the quotes of where you are sitting in the market.

Re:If the question is:

[Anonymous Coward]

they are only reported for pension funds, mutual funds and other regulated assets. Hedge funds are unregulated, so they don't "have" to report to the SEC. Even those that report, it's at a very coarse level once or twice a year. Even then, many small financial advisors have issues with the level of details reported by hedge funds. Often small financial advisors have to "estimate" the loss/gain if their customers want to file by the tax deadline, or they have to file an extension. The reality is the picture isn't all that clear. The bid/ask is definitely not reported, which is also what high freq traders use to skim the system.

Re:If the question is:

[ackthpt]

If the question is, "are financial institutions doing the end run around public or private regulation for the purpose of screwing people, engaging in fraud, and dodging (necessary) liability?" the answer is always yes.

If Mitt had been elected, this would be cheered on by the Whitehouse as good and normal capitalist activity and the FINRA would be disbanded.

Re:If the question is:

[Anonymous Coward]

If Mitt had been elected, this would be cheered on by the Whitehouse as good and normal capitalist activity and the FINRA would be disbanded.

That's because Mitt and the people who agree with him on economics are FUCKING MORONS.

If you got rid of FINRA, the entire stock market would be open for fraud by companies like Enron, and the whole market would be expected to become "Screw you, because I just did".

These guys want some drooling idiot version of anarcho-capitalism where if the bank rips you off from your life savings that's your problem.

That particular view of capitalism wants corruption, cheating, and outright theft to be rewarded, and is only advocated for people who would immediately start acting corrupt, cheating, and outright stealing.

All these idiots who are worshiping at the altar of unrestricted capitalism basically want to get rid of the rules which keep them honest.

Re:If the question is:

[Anonymous Coward]

The trades are reported, just like any other trade and will show up on the consolidated tape.

The dark pools are able to take advantage of some fine print in the regulations since the offers to buy and sell and not displayed. They can trade at price points between whole cents. They can also minimize the market impact of making a large trade. None of this will make much difference to a retail investor.

Unless you are building HFT system or making trades of more than a few 100k, you can ignore them.

Re:If the question is:

[dyingtolive]

What does that have to do with anything?

Might as well have said "If Emperor Palpatine was elected, he probably would have laughed that creepy little laugh of his and then destroyed Alderaan."

Yes, you're probably right. However, Mitt is not president. You don't need to worry about him being elected in 2012, because it's over. We still have lots of real problems.

To your point however, I also observe that Obama does not seem to have any problems with Wall Street practices either. It's almost like both political parties are just two sides of the same shit sandwich.

Re:If the question is:

[g0bshiTe]

So then bankers would become like the politicians? Say it ain't so!

Re:If the question is:

[geekmux]

If the question is, "are financial institutions doing the end run around public or private regulation for the purpose of screwing people, engaging in fraud, and dodging (necessary) liability?" the answer is always yes.

And apparently after the financial meltdown of 2008 and the new rules surrounding those who are deemed "too big to fail", if the question arises regarding who will be punished for such activity to the point of preventing it from happening again, the answer will always be good luck with that shit.

Re:If the question is:

[dkleinsc]

That's because Mitt and the people who agree with him on economics are FUCKING MORONS. ...

That particular view of capitalism wants corruption, cheating, and outright theft to be rewarded, and is only advocated for people who would immediately start acting corrupt, cheating, and outright stealing. All these idiots who are worshiping at the altar of unrestricted capitalism basically want to get rid of the rules which keep them honest.

Umm, I think you just answered your own question: Mitt, who built his fortune on various forms of cheating and theft, wants to get rid of the rules that might stop him from continuing to cheat and steal. And he definitely doesn't want to be honest.

Re:If the question is:

[DarkOx]

So to make sure I understand you correctly. What you are saying is Obama and his management of financial regulations is so pathetic, and shamefully corrupt; your only option is to compare his actions to other hypothetical time lines to make him look better. Got it.

Re:If the question is:

[Jawnn]

If the question is, "are financial institutions doing the end run around public or private regulation for the purpose of screwing people, engaging in fraud, and dodging (necessary) liability?" the answer is always yes.

But that's the "free market" at work. How dare you suggest that taking advantage, even extremely unfair advantage of suckers is somehow wrong. That's just..., just... un-American.

Re:If the question is:

[Anonymous Coward]

If the question is, "are financial institutions doing the end run around public or private regulation for the purpose of screwing people, engaging in fraud, and dodging (necessary) liability?" the answer is always yes.

If Mitt had been elected, this would be cheered on by the Whitehouse as good and normal capitalist activity and the FINRA would be disbanded.

Well, if Obama had been elected, he would have just ignored the law anyway. Just like he did with his own health care reforms.

And then taken the Fifth. Just like his IRS attack dog did.

Then the most transparent administration evah would secretly transfer all records to the CIA so they could avoid FOIA requests.

I guess it's a good damn thing Obama didn't get elected. Imagine those corrupt tyrants reading all your emails.

That could never happen in the US of A. There aren't that many USELESS FUCKING IDIOTS more than willing to be fooled over and over again, now are there?

Re:If the question is:

[See Attached]

Lets not forget hiding in the shadows to avoid taxes too! Lets be sure to look at the loopholes. I am all for industry that provides some service or societal benefit, but not just siphoning off anothers cash stream.

Re:If the question is:

[ebno-10db]

That pretty much sums it up. This comes from someone who voted for Obama in 2008, and voted Green in 2012, so I'm not exactly a rabid right-winger upset that Mitt didn't get elected. I'd vote for the Democratic party if it was still around.

Re:If the question is:

[swb]

I'm fine with that form of anarcho-capitalsm because I presume it comes with enough lawlessness that I can reclaim (or attempt to reclaim) my funds through the barrel of a gun.

It's one thing to lie and cheat and then hide behind the protections of civil society, it's quite another to lie and cheat when there's no protection of civil society.

Re:If the question is:

[Archangel Michael]

And people like you are under the impression that government involvement is any better than no government involvement. Enron Happened. Housing Market Happened. Multiple other scams have happened, all under the watchful eye of Government. Yet I don't see you blaming government for their lack of oversight. I wonder why that is.

And if you think big government is okay, then you're probably fine with big government spying on people, targeting people by the NSA, IRS etc, while shirking any responsibility by saying "I know nothing!" (/Sgt Schultz voice) or "I plead the fifth".

You see, how easy it is to poke fun at people who are idiots.

Nobody wants "corrupt, cheating, and outright stealing" except the robber barons, which include both (R) and (D) people alike (see Harry Reid, Diane Feinstein etc for example). Some people just prefer the (D) over the (R) brand, but are still idiots thinking they are any different in any meaningful way.

Let me ask you it this way, don't you try to avoid government red tape when you do business? Oh wait, you probably aren't in business, but on someone else's payroll.

Re:If the question is:

[DaHat]

I wish I had mod points... because they would be yours.

Re:If the question is:

[ak3ldama]

If he doesn't tear down these rules, then what are his kids going to do? This is a man with a dream!

Re:If the question is:

[phantomfive]

FINRA is a private corporation. Pretty sure that's the kind of thing Republicans like.

Re:If the question is:

[phantomfive]

Paul Volcker had the right answer, IMO.

He said, "We may not always be able to prevent collapses, but any bank that is too big to fail (ie, any bank that takes government money) needs to be broken up and sold off in pieces to prevent it from happening again."

The way things are now, we're just waiting for another collapse. Nothing was fixed from the last time.

Re:If the question is:

[ackthpt]

So then bankers would become like the politicians? Say it ain't so!

Why be like them, it's cheaper to just buy politicians.

Remember when Post-2008 banking regulations were proposed, the sort which were enacted after 1929 when some of the same dirty practices were in effect? Didn't a whole load of House representatives object to and fight better oversight of banks? Sure makes you wonder who in their home districts they were pretending to represent. I'd have been down to my reps office with a boiling vat of tar and a bag of feathers had he tried that.

Re:If the question is:

[ktappe]

>I presume it comes with enough lawlessness that I can reclaim (or attempt to reclaim) my funds through the barrel of a gun Of course you can't, because you're not rich enough for the laws to not apply to you.

Re:If the question is:

[stenvar]

These guys want some drooling idiot version of anarcho-capitalism where if the bank rips you off from your life savings that's your problem.

Instead, Obama and progressives want some drooling idiot version of a "social market economy", which in practice means ineffective regulation, the occasional sacrificial lamb for propaganda purposes, and complete protection of these cozy little fraudulent oligopolies from competition through onerous regulation.

I can't speak for Mitt, but what I want is to get rid of these bloated exchanges and replace them with cut-throat competitors. But that's not going to happen as long as people like Obama impose so much regulation that only his wealthy and well-connected donors can afford to offer financial services and financial regulators come down on any upstart competitor like a ton of bricks.

Re:If the question is:

[Anonymous Coward]

Trades are reported at different levels. There's reporting at the exchange level, which is very coarse grain and doesn't tell you who bought what. There's reporting to the SEC, which all pensions, 401K and mutual funds must do. For example, if you look at the annual report for a 500 index fund, it will say how many shares were bought/sold that year. Normally, the established 500 index funds don't report the minute details of when securities were bought and what the average price was, how many chunks or who they bought it from. Hedge funds that want money from pensions, 401K and mutual funds have to get rated, which means they have to comply with the minimum reports required by the regulations. Basically the SEC requires they report what securities they invest in, but it doesn't require fine grain details. The reason is obvious, if hedge funds provided fine grain details, their competitors might be able to reverse engineer their trading strategy. Fund managers for pensions and mutual funds are suppose to dig deep to make sure they aren't taking excessive risk, but some just say "it meets the minimum rating" so we'll invest in it. NOT all hedge funds want money from pensions or mutual funds, so it's not the entire hedge fund industry. The reality is the investment industry is made up of mostly good people, but the corrupt jerks at JPMC and the top brass at the big banks screw it up. They make everyone in the financial industry look bad, when it's a small group of people robbing everyone around the world.

Re:If the question is:

[Tailhook]

Housing Market Happened

The US government invented MBSs. The US government made the MBS market via fannie, freddy and the whole clan of bubble inflating quasi-government enterprises buying trillions in MBSs. Government is the reason mortgages became liquid assets. Prior to then mortgages were balance sheet assets held by deposit banks and Wall Street didn't get to play with them.

then you're probably fine with big government spying on people

These goose stepping lefties have no problem indulging double standards. They cheered Obama on as he created the CFPB to sift through all electronic financial transactions. Moaning about NSA metadata collection on one hand and trumpeting the absolute nullification of privacy in financial matters on the other... somehow, in the minds of these people, the same government that can wade through your entire financial history with impunity is supposed to have the utmost respect for your phone calls and emails.

Re:If the question is:

[i kan reed]

No, at a certain point, it becomes about ego. "Look at all I own, I deserve the presidency." It's hard to imagine this, but there is such a thing as so much money that you can do whatever you want, period and Romney was well past that threshold. He didn't need more money. He needed a way to feed his ego when there were those who were richer than him.

Re:If the question is:

[Anonymous Coward]

(not the same AC)

And people like you are under the impression that government involvement is any better than no government involvement.

False dichotomy. Saying Mitt/Republican policies are bad doesn't automatically mean you support Obama/Democrat policies, or believe government will fix everything. Read the other AC's post. Nowhere did he mention he supports Obama/Democrats (maybe he doesn't, but not in the GP)

It's amusing how you later talk about Ds and Rs being the same, but you yourself are assuming anybody who doesn't support the R brand is a fan of the D brand

Yet I don't see you blaming government for their lack of oversight.

Absence of evidence is not evidence for absense.

If he really is an Obama/D fan (which again, is an assumption on your part), I'm willing to bet he DID complain, and asked for MORE regulations, as that is the standard M.O. of the statist.

And if you think big government is okay, then you're probably fine with big government spying on people

Another false dichotomy. Slippery slope. Etc.

You see, how easy it is to poke fun at people who are idiots.

Ok, you're right. You were very easy to poke fun at.

Nobody wants "corrupt, cheating, and outright stealing" except the robber barons. Some people just prefer the (D) over the (R) brand, but are still idiots thinking they are any different in any meaningful way.

So what does that say about you, who automatically assume the other AC is a (D) simply because he disagrees with the Mitt/(R) brand?

Again, you were very to poke fun at.

Re:If the question is:

[ttucker]

None of this information soaked into the original poster.

Re:If the question is:

[Dr Fro]

Actually, if Mitt had been elected, the Jovians would not have invaded in the year 2015 and we would not have been shipped off to Callisto in 2025... That's how it looked like in my time machine.

Re:If the question is:

[ttucker]

So they are just two pieces of bread with shit on one side? That sounds like a fairly lucid analysis.

Re:If the question is:

[ttucker]

Yes... it is a good thing none of those things happened... :(

Re:If the question is:

[rhekman]

Paul Volcker had the right answer, IMO.

It's a shame more people don't pay attention to Volcker.

I also think it's a shame /. commenters string together a series of cuss words and add the word "capitalist" and get modded up. Instead, how about we have an intelligent discussion about whether this trading practice promotes bad ethics or somehow hides information from customers or trading partners.

Also, since this is supposedly a technology site, can we discuss whether the fact this trading is computerized somehow makes it unique from other kinds of markets?

Re:If the question is:

[Anonymous Coward]

All those things are true. The really sad part is that he was still the best of the choice when it came time to vote in the general election...

Re:If the question is:

[Anonymous Coward]

These guys want some drooling idiot version of anarcho-capitalism where if the bank rips you off from your life savings that's your problem.

Indeed that is a drooling idiot version of anarcho-capitalism, since an anarcho-capitalist society would not force us to do business with these banks in the first place. Even if you used banks, the lack of taxes and regulations would make it easy to spread your savings across hundreds of them automatically. No one actually wants to trust a handful of limited-liability corporations with their life savings, but apparently most people want everyone else to.

Re:If the question is:

[Anonymous Coward]

Wow, you are completely full of hooey and not well educated on the facts. Let me ask you this, ever take a finance class?

Re:If the question is:

[Vladius]

You sound like anyone one of the endless, useless tools that believe that government corruption begins and ends with Obama.

Re:If the question is:

[Sarius64]

Seriously, do you ever take than tin foil hat off? Audit Obama's campaign records and then talk shit about untold riches. Yep, all those innocent Democratic Klan members:

http://www.nationaljournal.com/politics/democrats-make-it-official-they-ll-take-undisclosed-donations-too-20110429

http://spectator.org/archives/2011/05/02/obama-vs-the-undisclosed-donor

https://www.stlbeacon.org/#!/content/17875/funding

http://www.beachwoodreporter.com/politics/obamas_small_donor_myth.php

http://abcnews.go.com/blogs/politics/2008/10/those-undisclos/

http://pumapac.org/forums/feck-obama-team/

Re:If the question is:

[i kan reed]

Please explain relevance? Especially given your ad-hominem that seems purposely unrelated?

Re:If the question is:

[Anonymous Coward]

When the greater good requires putting limits on the wealth-acquisition abilities of the currently wealthy, then the greater good usually goes unserved.

Smart people can speak the truth in the public eye all they want; it will accomplish nothing.

Re:If the question is:

[i kan reed]

Well, I understand the dislike for cursing in place of meaningful debate, but there's a lot of legitimate criticism to be had about modern incarnations of free-market capitalism, especially where social responsibility of investors/capitalists is a factor. I'm not saying there's a clearly better system, but there is a "religion of the free market" that reminds me a lot of how soviet true-believers used to think "true communism" was just around the corner.

Re:If the question is:

[phantomfive]

Definition of "social responsibility:" the things the speaker thinks a corporation should do.

That's why you run into problems discussing social responsibility, it has too many definitions. Much like morality and ethics.

Re:If the question is:

[Anonymous Coward]

Not GP.

And people like you are under the impression that government involvement is any better than no government involvement. Enron Happened. Housing Market Happened. Multiple other scams have happened, all under the watchful eye of Government. Yet I don't see you blaming government for their lack of oversight. I wonder why that is.

Straw man. Not only did GP not say that government should be involved (likely meant it, but the root solution was implied to be some sort of oversight by somebody) he didn't say that oversight would solve the problem. It wouldn't. But I, also, firmly believe that we are better with it.

And if you think big government is okay, then you're probably fine with big government spying on people, targeting people by the NSA, IRS etc, while shirking any responsibility by saying "I know nothing!" (/Sgt Schultz voice) or "I plead the fifth".

Another straw man and an ad hominem. I don't know a single person who thinks the NSA spying was a good thing to do; meanwhile I personally think the IRS got carried away with their "these people have core beliefs that they should not pay taxes/as much taxes as required so maybe we should pay closer attention to their tax returns and 501(c)(3) applications" intention.

You see, how easy it is to poke fun at people who are idiots.

Ad hominem and flat out insult. It's at this point that I stopped taking you seriously.

Nobody wants "corrupt, cheating, and outright stealing" except the robber barons, which include both (R) and (D) people alike (see Harry Reid, Diane Feinstein etc for example). Some people just prefer the (D) over the (R) brand, but are still idiots thinking they are any different in any meaningful way.

Over-generalization. There are meaningful differences between the beliefs of Democrats and Republicans - claiming the two parties think alike is ridiculous. Do they both have good guys and bad guys? Yes. People who are willing to work across the fence and people who would rather die than meet in a middle ground? Yes. Are many driven, cynically speaking, by greed and ego? Yes. But tell me, what is the bipartisan consensus on women's rights? Abortion and birth control? Separation of church and state? Immigration? Taxes?

Let me ask you it this way, don't you try to avoid government red tape when you do business? Oh wait, you probably aren't in business, but on someone else's payroll.

And we round off the reply with a third ad hominem. Those who run businesses have different interests than those who are employed in the white and the blue collar industries. Yes, it's a fact. Businesses are often accountable to boards or shareholders and employees are accountable to their families, and both will prioritize their actions accordingly. Red tape can be inconvenient, and I'm sure some of it is just there to screw employers over, but thanks to red tape and regulations we have things like unions, and standards, and oversight. Do you think nuclear power plants give a damn about dumping warm water into local streams and rivers? If I get seriously injured on the job how quickly will my employer fire me because I'm unable to work? When my bank raises interest rates high enough that I can no longer pay off my debts, how much do you think they'll sell my house for? I can't fight those battles, and while it may not be much or even be entirely effective I'm glad there's somebody out there with some weight to throw around should I need a hand.

Re:If the question is:

[Hatta]

There are meaningful differences between the beliefs of Democrats and Republicans

I don't know about their beliefs, but their policies are indistinguishable.

Do they both have good guys and bad guys?

No, they are all bad guys.

But tell me, what is the bipartisan consensus on women's rights?

The bipartisan consensus is that womens rights is a great issue to distract the populace so that they don't realize the entire system is a scam. e.g. Obama can give the finance industry anything he wants, exactly what Romney would have done, no progressive is going to complain as long birth control is covered by Obamacare. Republicans throw a completely disproportional shitfit, in order to make it look like there's actual debate in Congress, and either way the actual decision goes the rich win.

Separation of church and state?

Same thing as womens rights, just a ploy to distract the people. Christianity teaches us to take care of the less fortunate. But we can't have that, so they invent a controversy stemming from some forgotten passage in the old testament, and literally make a federal case out of it.

Immigration?

The bipartisan consensus on immigration is that immigrants are a pawn to be used in political games.

Taxes?

Yet another issue that's overinflated to create a percieved difference where there is no honest difference. Boehner damn well knows that you can't balance the budget without both tax increases and spending cuts. His only complaint is that he would have to cooperate with Obama, which would appear to be weakness on his part. He figures the Republicans will get more votes by looking strong and being wrong than looking weak and being right. He's probably right, but it's not an honest disagreement on what constitutes good policy.

This gets all the more frightening when you look at the issues on which there is broad bipartisan consensus. There is no debate on NSA surveillance. There is no debate on the war on drug users. There is no debate on the criminal prosecutions of banking executives. On all the most important policies, there is bipartisan consensus for the most harmful position. On all the most trivial policies, there is feigned debate.

Re:If the question is:

[chill]

Chief among these is the agency's infant Automated Bluesheet Analysis Project, she said. Blue sheets, no longer on blue sheets of paper, provide the SEC with detailed information about trades performed by a firm and its clients. The information, now sent in electronically, includes the security's name, the date traded, price, transaction size and a list of the parties involved.

http://www.tradersmagazine.com/news/sec-automates-identification-suspicious-trading-110401-1.html?pg=1

Re:If the question is:

[perceptual.cyclotron]

Nah. Both sides want the same thing – socialism to cover the diseconomies (pollution, resource depletion, large-scale infrastructure, financing police to protect property and put down dissenters, etc.), capitalism to cover the profits, and heck, a little more socialism to cover corporate welfare (subsidies, dirt cheap leases of public property and the natural resources they contain, huge tax breaks, publicly funded research, bailouts, etc.).

The elites don't want pure capitalism or pure socialism (and they sure as hell don't want anything resembling democracy or anarchism – which are really quite similar philosophically, we just forget that no one has ever actually attempted democracy). The elites trot out these platonic systems because they have ideological benefits, encouraging people to accept certain outcomes as natural, necessary, or obvious. The presentation of a capitalist-socialist dichotomy, and the indoctrination of socialism as 'evil' provides justification to deregulate, and to roll-back social services, while the veneer of democracy ensures the appearance of legitimacy, and a mechanism for taxation (socialism by any other name...) to support corporate welfare.

It is a safe bet, in US politics (and many other arenas), that wherever R & D are viewed as discrepant, there is an ideological motive behind the dichotomy itself, and both parties would sooner trade sides entirely than abandon the dichotomy itself. 'Circus and bread' exists as much, or more, in the realm of discourse as it does in events...

Re:If the question is:

[Anonymous Coward]

Paul Volcker had the right answer, IMO.

 

It's a shame more people don't pay attention to Volcker...

It's a shame more people don't wise the fuck up and pay attention to history. The Glass-Steagall Act of 1933 (as in 80 fucking years ago) was specifically put in place to prevent this kind of abuse.

That is until three greedy assholes decided to make their own Act in 1999 and repeal common sense...and the rest is history.

Now let's see if we're stupid and ignorant enough to believe it won't happen again.

CAPTCHA = burned. Go figure.

Re:If the question is:

[stenvar]

"Nah?" Where did I say that Republicans were different?

The elites don't want pure capitalism or pure socialism

Please take off your tinfoil hat and stop believing in conspiracy theories. This isn't about "them" or "the elites", this is simply people behaving rationally. If you got $1b in your account tomorrow, you'd be behaving exactly the same way, and you're no elite either.

Re:If the question is:

[NemosomeN]

They don't minimize it, they delay it. If someone offloads 100k shares of IBM into a dark pool, that pool is going to eventually want to remedy the sudden glut of IBM shares, and minimize their exposure to the level necessary to provide liquidity their clients demand. The converse is also true.

Re:If the question is:

[ultranova]

This isn't about "them" or "the elites", this is simply people behaving rationally. If you got $1b in your account tomorrow, you'd be behaving exactly the same way, and you're no elite either.

I wouldn't. Why would I? $1b is enough to spend the rest of my life on the lap of luxury, while having plenty of resources leftover to spend in any cause I considered worthwhile, be it charity or space colonization or whatever.

Technically speaking, "rational" means maximizing expected utility. The utility of money asymptotically approaches a finite value as the amount of money approaches infinity, and for most people is already pretty darn close to it at $1b. Thus it is not generally rational to make great or even modest sacrifices to make more money at that point, especially since you are pretty much guaranteed to profit from simple and perfectly above-ground index investing.

Cheating when you're winning is the domain of people with severe psychological problems, not Joe Average. It is also extremely irrational.

Re:If the question is:

[stenvar]

I wouldn't. Why would I? $1b is enough to spend the rest of my life on the lap of luxury, while having plenty of resources leftover to spend in any cause I considered worthwhile, be it charity

I.e., you would behave like the people you call "the elites". They aren't "cheating", they are fully convinced that they are benefiting humanity, whether it's Gates, the Koch brothers, Soros, or George Lucas.

Cheating when you're winning is the domain of people with severe psychological problems, not Joe Average. It is also extremely irrational.

As I was saying: you need to take off your tinfoil hat. The world isn't full of elites that are out to get you, the world is full of rich, dumb Joe Averages who use their billions to try to help people and screwing up.

If you ever get a billion dollars, do us all a favor and don't spend it on charity or trying to help people; instead, invest it and found more companies.

Re:If the question is:

[Anonymous Coward]

That's not technically correct. MBS is grouped in Asset-backed securities, which go back further than mortgage-backed (https://en.wikipedia.org/wiki/Asset-backed_security). Fannie and freddie popularized mortgage backed securities. The concept of asset-backed securities isn't good or evil. It is the implementation and the person created the ABS that turns it evil. The companies that created the toxic mortgage-backed securities did so willfully, so it wasn't some innocent mistake. If you look at the history of mortgage-backed securities, done properly it "can" work. Though things are so broken today, the reporting structure of asset backed securities has to change. Instead of based on rating, a mortgage backed security should list in full detail the mortgages that make up that securities, along with the actual risk of default and likelihood of it making the full interest. Given people refinance, the potential return on a mortgage from interest differs from the actual return. I've implemented the MBS calculation in the past and the math is "mostly" straight forward. I say mostly because the risk and estimated return is a "best guess". The SEC was considering that approach about 2 years back and requested proposals, but it never got any where. The reason is simple, no political will. For the record it wasn't the left or right that made the crashes. It is immoral jerks in positions of power that created the mess. The only party these people belong to is "More money is good and even more money is better, so screw everyone else" party. These people (ie the perps that created these crashes) are pathological. If you really think it's one party versus the other, then you've already lost the battle.

Re:If the question is:

[Trogre]

No, he was not. The best choice is almost never among the top two.

You must vote third party. You are certain not to get the president you want this time, but it's the only way, short of a bloody revolution, to begin to change the obviously unworkable status quo.

Seriously, if your vote is for either of the top two, you really are voting in either Kodos or Kang.

Re:If the question is:

[smellotron]

I can't speak for Mitt, but what I want is to get rid of these bloated exchanges and replace them with cut-throat competitors.

That's what BATS and DirectEdge have been trying to do, for several years now. It's hard to de-throne NYSE and NASDAQ because of the network effect: traders go to NYSE/NASDAQ markets because there is liquidity there. Liquidity is created by traders. So, if everyone moved tomorrow the old exchanges would die quite fast, but that's similar to the thermodynamic probability of all of the particles in your body moving in the same direction at once.

Re:If the question is:

[stenvar]

Well, obviously BATS and Direct Edge are not providing an innovative and cheap solution, they are just trying to provide the same service as the big guys, with the same restrictions and overhead. In fact, BATS doesn't even seem to have their software under control.

Re:If the question is:

[khallow]

I have to disagree with your assertion that this guy would behave the same. We have to remember that people who have a billion dollars typically obtained that through considerable effort and market advantage or by being related to someone who did. That rules out most people who aren't disciplined to save enough for a hundred thousand dollars much less a billion. This is a case of sample bias with strong correlation to the very issue at hand, managing a billion dollars.

Re:If the question is:

[khallow]

When the greater good requires putting limits on the wealth-acquisition abilities of the currently wealthy

Protip: it doesn't.

Re:If the question is:

[stenvar]

I've never seen any evidence that the wealthy as a population are particularly different psychologically from other people with similar levels of education. If you know of any evidence, do share it.

Re:If the question is:

[khallow]

I've never seen any evidence that the wealthy as a population are particularly different psychologically from other people with similar levels of education. If you know of any evidence, do share it.

They have the money. Now they might have obtained that money by amazing inventions, by robbing a million widows at a time, or by being related to someone wealthy. But the point is that there is a degree of selection among the very wealthy for people who can accumulate and financially manage a billion dollars.

Re:If the question is:

[stenvar]

"Millions of people play the lottery, but only a few get rich. "Obviously", there must be a degree of selection for the people who can successfully buy a lottery ticket and get rich off it."

Sorry, you're just waving your hands.

Re:If the question is:

[xelah]

Probably true. The thing about people with huge amounts of money is that they seem to like gaining more money as if it were some sort of competitive sport. That's just one reason they have so much in the first place. It's also why I found it so amusing when UK media reports a while ago suggested 'naming and shaming' highly paid CEOs by publishing a list, as if it would do anything other than cause number 47 to demand a pay rise 'because I'm a top ten sort of boss, not a top 50 sort of boss'.

It's not hard to imagine someone like that entering politics as yet another competitive sport.

Re:If the question is:

[khallow]

"Millions of people play the lottery, but only a few get rich. "Obviously", there must be a degree of selection for the people who can successfully buy a lottery ticket and get rich off it."

Ok, that happens to be a completely random process for getting a few people extremely wealthy. It also happens to have generated zero billionaires.

Sorry, you're just waving your hands.

Well, there isn't a high level of rigor required here. You can go ahead and claim that getting extremely wealthy is like winning the lottery. But it isn't. Sure there is a factor that is random luck. But it's also obvious that someone somewhere turned that luck into considerable wealth.

Re:If the question is:

[Bill, Shooter of Bul]

No Mitt is self deluded into thinking that what he has done has been moral. Its the rich christian syndrome. I'm successful, and I'm christian, therefore God wanted me to be successful and therefore everything I've done has been good.

Re:If the question is:

[Anonymous Coward]

But it's also obvious that someone somewhere turned that luck into considerable wealth.

Sure, but that actually supports the GP's notion that rich people are not particularly different than the rest of us.

Why? Well, that "someone somewhere [who] turned that luck into considerable wealth" are the rest of us. They're the accountants, the lawyers, the managers, the workers, the guards, the politicians, the laws, etc.

All the rich did was hire people, because they had the money to do so. Starting businesses and hiring people is not a secret esoteric art or rare gift that has a disposition to fall upon the rich. Less-rich people start businesses too, we call those small businesses and they make up for like half the economy. Individually their business is smaller and hire less people, but that's more of a function for how much money is available to them, not a function of the person who owns the business.

Short of exceptions, the richer you are, the less likely you built your wealth and empire with your own two hands (and it's generally a good idea to do so, as an empire that relies too much on its leader would risk crumbling quickly after you die). That's why those who manage to do that are highly praised and remembered (even if again, their empire crumbles shortly after they're gone)

Re:If the question is:

[Bill, Shooter of Bul]

Yeah, uhm... With more money come more guns, and not just guns but private armies to kill you after they take your money. In this world, whoever has the most money is right, and whoever disagrees is dead.

Re:If the question is:

[stenvar]

Well, there isn't a high level of rigor required here

There is a great deal of rigor required. For a long time, wealth was considered a consequence of genetic superiority or divine favor. Entire wars have been fought over this question and caste systems have been built around it. Waving your hands and saying without evidence "it's obvious that rich people are different" just doesn't cut it.

Re:If the question is:

[Anonymous Coward]

Offtopic

The events of 2008 had absolutely nothing at all to do with dark pools. Nor do "banks that are too big to fail".

I completely agree that a bank that's too large to fail should be broken up immedately. But neither that, nor the elimination of dark pools, would have prevented the 2008 disaster. The meltdown was mostly due to ridiculously managed and over-rated CDOs, combined with very high leverage.

Re:If the question is:

[perceptual.cyclotron]

It is, of course, a difficult subject to study – since the super-rich have no interest in putting themselves under the public microscope. There have been indirect attempts, however, for instance: Higher social class predicts increased unethical behavior" (see popular accounts if you don't have PNAS access).

As to the all-too-familiar cries of "conspiracy theory! conspiracy theory!" – you ought to find a less tired and trite means of arbitrarily forcing closure on discussion. Considering 'conspiracy theories' have routinely been borne out in history (e.g., COINTELPRO, Iran-Contra, and oh let's see - warrantless blanket surveillance?), the knee-jerk reaction that conspiracy theories are inherently ridiculous is itself a tremendous ideological victory.

The irony is that people who cry "conspiracy theory!" are actually proposing something much more ridiculous: That the very small collection of men who own and control most of the world do not meet and discuss their interests behind closed doors, and do not leverage their tremendous wealth and power to further their personal interests. That the consistent policies of governments from every stripe over decades and decades to extend corporate power and the preeminence of property rights above all other rights (including national sovereignty, in the case of free trade agreements) has somehow been a coincidence – with no influence from the power holders who benefit from these decisions.

Truly the reactionaries and nay-sayers propose the wildest theories of all...

Re:If the question is:

[khallow]

There is a great deal of rigor required.

Provide supporting evidence for this alleged requirement for rigor or GTFO.

For a long time, wealth was considered a consequence of genetic superiority or divine favor. Entire wars have been fought over this question and caste systems have been built around it.

So what? I see this argument as completely irrelevant.

Re:If the question is:

[khallow]

Starting businesses and hiring people is not a secret esoteric art or rare gift that has a disposition to fall upon the rich.

But it is an unusual skillset which is greatly overrepresented among the rich.

Re:If the question is:

[smellotron]

Well, obviously BATS and Direct Edge are not providing an innovative and cheap solution, they are just trying to provide the same service as the big guys, with the same restrictions and overhead.

I'll grant you that they are registered as exchanges, which does add overhead and probably represents a large barrier to entry. But why do you say "obviously"? Their baseline fee structures are cheaper in aggregate than either NYSE or NASDAQ. The last time I checked, their market data access was cheaper, too. They also provide quite a wealth of useful order-entry functionality (including routing), making them good systems for small guys to connect to directly. As I see it, this adds up to providing better service to customers (particularly the little guy). Nothing is revolutionary, but I don't see it as "more of the same".

In fact, BATS doesn't even seem to have their software under control.

I don't blame you for that attitude, because they did get quite a public sting from their botched IPO. But every exchange has had major software problems: NASDAQ's auction process was DoS'ed by an old bug for the Facebook IPO. DirectEdge did a major system upgrade at the same time as they converted from an ECN to an exchange, and they were basically unusable for days. NYSE seems to have regular problems delivering data to the SIPs, to the point that the SEC finally decided to fine them for unfair market access. Nobody in the market has an untarnished history; IMHO, BATS only got egg in their face because the technology problem coincided with their IPO, so all eyes were already on them.

Re:If the question is:

[Anonymous Coward]

You make completely unsupported assertions about supposed differences between the rich and the rest, then when challenged to provide any sort of evidence, you say I need to "provide supporting evidence" for asking you for evidence? You're a moron.

Re:If the question is:

[stenvar]

It is, of course, a difficult subject to study – since the super-rich have no interest in putting themselves under the public microscope. There have been indirect attempts, however, for instance: Higher social class predicts increased unethical behavior" [pnas.org] (see popular [huffingtonpost.ca] accounts [wired.com] if you don't have PNAS access).

That study isn't relevant to what we have been discussing, since it looks at upper/lower class distinctions, not billionaire/upper-middle class distinctions. It also has numerous conceptual problems.

But let's assume for the moment that the study were not utter b.s., what does it say? Here is what I said:

This isn't about "them" or "the elites", this is simply people behaving rationally. If you got $1b in your account tomorrow, you'd be behaving exactly the same way, and you're no elite either.

Here is what Study 4 shows:

the experience of higher social class has a causal relationship to unethical decision-making and behavior.

I.e., it's not that unethical people become rich, it's that rich people become "unethical" (in the sense of the study). Just like I said. (Of course, some of them may have been "unethical" to start with, like in any group of people.)

The irony is that people who cry "conspiracy theory!" are actually proposing something much more ridiculous: That the very small collection of men who own and control most of the world do not meet and discuss their interests behind closed doors

And if you got a billion dollars, you'd join that club and behave the same way; see above.

Your error is in assuming that people who are rich are intrinsically immoral, and that their motivation is to increase their wealth without limit at the expense of everybody else. But that's simply not what motivates most of these people. Most of them seem to be motivated by actually trying to help the world and being remembered as philanthropists; the reason they do so much harm is because they are so bad at it and they have the resources to spread the harm around.

Re:If the question is:

[Anonymous Coward]

The article is misleading. Bluesheets reporting is meant to govern insider trading. As others have said, there's different levels of reporting and compliance.

Broker-dealers refer to stock brokers, employees of brokers, exchanges and employees of exchanges. People who work in the financial sector have to sign an agreement they will file a report for every trade they do. That is different than investment banks, which follow a different set of regulations.

Don't fall for the lie, learn more and dig deeper.

Re:If the question is:

[Anonymous Coward]

But it is an unusual skillset which is greatly overrepresented among the rich.

My previous already explained why that's not true. For your benefit, I'll repeat a couple pertinent points

-small business make up about half the economy. So that means lots of not-rich people have the skill set

-the richer you are, the less likely you're doing the job yourself, but hire somebody else (a not-as-rich person) to do it. That means there are not-rich people with the skill set to be hired by the rich.

If you really believe are so much different than the rest of the people, then I gotta ask: how do you feel if society stops trying/pretending to be capitalist or democratic? Why not we switch to something like a caste system, where the rich elite ruling class is official recognized and entrenched as better than everybody else? Since they rich overlords have skill sets that most of us don't have, let them decide everything!

Re:If the question is:

[khallow]

You make completely unsupported assertions about supposed differences between the rich and the rest

So? I wasn't insisting on rigor so I'm consistent with my arguments on the matter.

then when challenged to provide any sort of evidence, you say I need to "provide supporting evidence" for asking you for evidence?

You're the one demanding that I provide more rigor without providing any of that demanded rigor yourself. That's inconsistency in your argument. So I in turn insist that you provide a rigorous reason for me to step up my game.

Re:If the question is:

[khallow]

-small business make up about half the economy. So that means lots of not-rich people have the skill set

To manage small businesses (or not as the case may be) not large ones. To manage relatively small amounts of assets, not hundreds of millions of dollars. But by looking at this category of people, we already see a great winnowing in the number of people who can be considered to do comparable activities to what some wealthy do.

-the richer you are, the less likely you're doing the job yourself, but hire somebody else (a not-as-rich person) to do it. That means there are not-rich people with the skill set to be hired by the rich.

So what? Observing that maintaining great wealth requires some degree of cooperation with other people doesn't mean much. Most of us cooperate with others all the time and we don't become billionaires as a result.

If you really believe are so much different than the rest of the people, then I gotta ask: how do you feel if society stops trying/pretending to be capitalist or democratic? Why not we switch to something like a caste system, where the rich elite ruling class is official recognized and entrenched as better than everybody else? Since they rich overlords have skill sets that most of us don't have, let them decide everything!

Well, why would I want that? Even if the wealthy were better at running society, we'd still have conflicts of interest.

Re:If the question is:

[Anonymous Coward]

To manage small businesses (or not as the case may be) not large ones. To manage relatively small amounts of assets, not hundreds of millions of dollars.

I'll respond to this with this other part

So what? Observing that maintaining great wealth requires some degree of cooperation with other people doesn't mean much.

No, it means a lot. It shows that the management of larger businesses and larger amounts of assets was not done and made possible by the skill set of the rich person alone.

But by looking at this category of people, we already see a great winnowing in the number of people who can be considered to do comparable activities to what some wealthy do.

No, we do not. Well, we do not if we aren't limiting ourselves to recent history. In broader history, social mobility does exist (in places that are freer than others). The US in particular was founded on the idea that every free man can rise to their stature, regardless of their background.

In other words, just because somebody isn't rich today doesn't mean they don't have the skill set to become rich - they just hasn't gotten there yet (or for whatever reason they choose not to pursue it... lack of motivation is not the same as lack of skill). You don't seem to believe that, which is why I asked if you'd be fine with a caste system, where there's no pretense of social mobility: you in the lower class just don't have the skill to belong in a higher class, know your place!

why would I want that? Even if the wealthy were better at running society, we'd still have conflicts of interest.

Why wouldn't you? The rich would be better at resolving conflicts of interests too. Who are we plebs to question their judgement? Oh, you think you'll have a conflict of interest with the rich? Too freaking bad, you're a lower class peasant, who are you to question their judgement? Their interest trumps yours!

Re:If the question is:

[khallow]

Ok, so you don't actually have a counterargument. If we were speaking of someone competing in the Olympics or who did specialized research in a hard subject, you might concede that some degree of aptitude might exist in the subject for that area.

But because we're speaking of wealth, which incidentally has more focus in society than either of the above two things, then the outstanding members of that category must have for some reason no more aptitude for accumulating or retain wealth than the average person, who somehow can't come within a few orders of magnitude.

It's a hard problem and I find it bizarre how people can continue to claim that it doesn't require some degree of unusual aptitude to acquire that sort of wealth.

Why wouldn't you? The rich would be better at resolving conflicts of interests too. Who are we plebs to question their judgement? Oh, you think you'll have a conflict of interest with the rich? Too freaking bad, you're a lower class peasant, who are you to question their judgement? Their interest trumps yours!

So why would I? I mentioned conflict of interest and you give me a runaround. Just because one might be skilled in resolving conflicts of interest doesn't mitigate a conflict of interest. After all, they could use that skill to resolve the conflict of interest even more in their favor.

And merely having more aptitude for accumulating money doesn't as you sarcastically claim above, give someone any moral grounds to rule others or moral insight in resolving the problems of rule. My observation is not a threat to whatever ridiculous belief system you happen to have.

Re:If the question is:

[Anonymous Coward]

Ok, so you don't actually have a counterargument.

First, that's factually incorrect. I do have and did give a counterargument.

Second, even if I do not have a counterargument, so what? You seem perfectly happy to not step up your game unless that other AC gives you a reason to. I'm just applying this right back at you. I don't have any reason to step up my game for you.

If we were speaking of someone competing in the Olympics or who did specialized research in a hard subject, you might concede that some degree of aptitude might exist in the subject for that area.

Sure, but my point is not that the rich do not have any merit. My point is that the skill set to become rich is not something that the rest of us somehow cannot acquire or develop.

It's a hard problem and I find it bizarre how people can continue to claim that it doesn't require some degree of unusual aptitude to acquire that sort of wealth.

It's precisely because it's a hard problem that I disagree with you. There are many factors to becoming rich (or fail to do so), and I'm saying the rich having special skills is not a factor (at least, not a big factor)

Let me make another reply to one of your points earlier. You said the rich cooperate with others. Well, if you're cooperating with somebody, that implies those people have complimentary and/or comparable skill sets.

I mean, if I'm a blithering idiot with neither complimentary nor comparable skills as you, would you cooperate with me? Would you hire me, particularly when it comes to managing your assets and running your business? Would you trust me with your money?

So why would I? I mentioned conflict of interest and you give me a runaround.

Of course I gave you a runaround, since you gave me a runaround in the first place, by responding to my question with one of your own ("why would I")

Just because one might be skilled in resolving conflicts of interest doesn't mitigate a conflict of interest.

Oh yes it does, since you can never prevent or eliminate conflicts of interest (well, not unless you can brainwash people to agree with your interests or something...). The best way to mitigate is to resolve them when (not if) they happen.

After all, they could use that skill to resolve the conflict of interest even more in their favor.

And that would be a good thing, since the rich are, according to you, so much better at increasing their own wealth and value. The gain in their value will be much more than your loss. You said it yourself: you can't even come within a few orders of magnitude to the rich.

And merely having more aptitude for accumulating money doesn't as you sarcastically claim above, give someone any moral grounds to rule others or moral insight in resolving the problems of rule.

Of course not (and I wasn't being sarcastic, really, who are you to question the rich if you think they're better than you?), but so what?

Historically, having moral grounds or insight has never been that important of a criteria to be a ruler. In fact, some of the biggest problems with society and government throughout history is when the state tries to resolve moral issues, but in turn creates new ones and other unintended consequences.

What made the US Founding Fathers (and those in the Age of Enlightenment) so brilliant is not that they had moral grounds, but they recognized that the government does NOT (and should not) have moral grounds over the people, and that government should stay out of people's way as much as possible, including (especially) their moral issues. Separation of church and state an all that.

Let the people sort out moral problems themselves. There are lower level needs on the

Re:If the question is:

[khallow]

Second, even if I do not have a counterargument, so what? You seem perfectly happy to not step up your game unless that other AC gives you a reason to.

It's the principle of reciprocity. That lazy ass AC demanded that I put a bunch of effort into fleshing out my opinion without doing anything on his or her own part to contribute. So I didn't bother.


Sure, you have people like the Walton kids who have lots of money due to being the right human egg cells fertilized by the right sperm. They don't have a good claim to inherent business aptitude (unless that sort of thing is partly hereditary, which it might be). On the other hand, a Sam Walton, who parlayed a $20,000 family loan into a vast chain of retail stores (Walmart and Sam's Club) which had revenue of $50 billion by the time of his death, probably had some natural ability. For example, he apparently restarted his business in several different locations before it really caught on. That's not simple to move a business and start over from scratch more than once, much less turn it into one of the largest businesses of the day.

So my view is that yes, you'll have a bunch of rich people who got lucky with who they were related to. But you also have the people who actually built up that wealth. I think that latter group (which actually consists of several different subgroups depending on the strategy used for wealth accumulation, some which can be rather underhanded or innovative) is very different from the normal population. There is a sample bias here which people aren't acknowledging.

I was simply asking how you feel about a caste system, because, with the way you seem to believe rich people are so different (better) than us, a caste system may better utilize their gifts, and result in a better society for not just them, but you as well.

Did I ever say "better"? No. That's evidence of your belief system speaking. Sure, being able to manage a billion dollars successfully may indicate that you are suitable for membership in some sort of ruling elite which is a dubious proposition in itself, but I remain puzzled why ruling is considered a good use of their talents.

Why should we desire a politician Sam Walton over a businessman Sam Walton? To the contrary, I think having Walton as a businessman has worked much better for society and humanity than having him as a politician or government bureaucrat.

And of course, there is the conflict of interest. I'm not better served by an extremely talented person who happens to be exercising that talent by robbing society blind.

Suppose I'm inherently really good at swimming and training for and performing in swimming competitions. Should that qualify me for membership in the ruling elite? Suppose I'm naturally intelligent and pick up some hard degrees in college. Does that qualify me for membership in the ruling elite? I suspect from what you've wrote that the answer would be a resounding NO for all three cases above no matter how much natural advantage I might have or how much it might contribute to successful rule over others.

Historically, having moral grounds or insight has never been that important of a criteria to be a ruler. In fact, some of the biggest problems with society and government throughout history is when the state tries to resolve moral issues, but in turn creates new ones and other unintended consequences.

What made the US Founding Fathers (and those in the Age of Enlightenment) so brilliant is not that they had moral grounds, but they recognized that the government does NOT (and should not) have moral grounds over the people, and that government should stay out of people's way as much as possible, including (especially) their moral issues. Separation of church and state an all that.

Let the people sort out moral problems themselves. There are lower level needs on the hierachy for government to worry about, which is the rich's cup of tea -

sounds familiar

[liamevo]

Why is this making me think of private torrent trackers?

Sometime it doesn't work

[Anonymous Coward]

I work at large US bank near some guys that develop the dark pool and it receives a huge amount of institutional an hedge fund flow. Although there are many redundant market data connections to make sure that we fill at the market price only, because of latency or bugs occasionally this is sometimes not the case. This can be off by significant amounts for significant for significant periods. There be dragons, lawyers and the maws of large beastly fines...

lower costs

[roman_mir]

well, this is absolutely normal human behaviour, finding ways to satisfy market demand at a price that is much lower than the official, government regulated, centrally planned (and can be argued government manipulated) market provides.

Whether the government enforces prohibition or imposes high taxes on cigarettes or anything at all for that matter, people find ways to find the products at a cheaper price and the government 'cracks down' on that because it wants a much bigger cut (be it from taxes and or from sales through the only legal, government supported monopolistic markets, which is the case here).

What does it cost to comply with all government regulations to run a stock exchange? Supposedly simple question, how much does the compliance with the Patriot Act cost?

Re:lower costs

[gstoddart]

Whether the government enforces prohibition or imposes high taxes on cigarettes or anything at all for that matter, people find ways to find the products at a cheaper price and the government 'cracks down' on that because it wants a much bigger cut

The government isn't just regulating stock markets because they want a cut.

They regulate them because there is a widespread opportunity for fraud and the bullshit from the Asset Backet Paper Commodities which were worthless but some how were getting passed off as AAA debt. It was a shell game of moving around the money until it was someone else's problem.

This isn't trying to "satisfy a market demand", this is trying to sidestep the entire market and play under a different set of rules than everybody else.

Banks and their high-frequency trading is just trying to take a cut out of the market before anyone else gets a chance. Why should trading institutions have privileged access to the market to pad out their own bottom line and skim the money off before everyone else can?

But, based on your posting history, you probably think it should be perfectly OK to manipulate the markets for their own ends.

Re:lower costs

[sjames]

It's not just government/regulation costs. It's the same behavior when stolen merchandise is sold. That is, some percentage of the population is willing to benefit personally from crime no matter how much value is destroyed in the process.

Re:lower costs

[gstoddart]

You mean like not having a budget, and spending literally trillions of dollars a year more than you take in?

So, in effect you're saying "since government can be inefficient, we should scrap all rules which keep corporations from committing outright theft"? Yeah, that'll fix the problems.

You're an idiot.

Re:lower costs

[Anonymous Coward]

well, this is absolutely normal human behaviour

Actually, this is superhuman behavior. Normal human behavior is to form collectives and use coercion to oppress others. From the early warlords and kings to the modern socialist mobs, normal human behavior is the proverbial crabs in a bucket: people trampling over each other trying to get on top of each other, even if society as a whole suffers for it.

It takes a special kind of human to do what you say, and very few people qualify. If anybody can start a business, be productive, find efficiencies, and provide the best goods at the best prices to the most people, poverty wouldn't be a problem and no mob could ever form to create government as we know it.

If it was normal behavior to look for efficiencies, western governments, which are supposedly by the normal people and for the normal people, would have naturally kept itself small and out of the way.

Re:lower costs

[Anonymous Coward]

What? AAA debt? Apple doesn't have AAA debt, and they have stockpiles of cash. Certainly there is low-value debt, but it doesn't earn AAA status.

Anyway, this is the stock market, not the bond market.

Re:lower costs

[roman_mir]

The government isn't just regulating stock markets because they want a cut.

- correct, there is a secondary reason, which is buying votes of the idiots, that believe that the government must regulate everything because some of them are corner cases, and some of them got conned and because 1-10% may lead to some loss or there is a con artist in 5% cases, now 100% of businesses must suffer through regulations.

Of-course it's worse for things like Patriot Act, all of a sudden all freedoms are suspended indefinitely, and useful idiots, like the ones I am normally 'conversing' here with believe that it should be that way.

The fraud is not a problem that is worthy of destroying freedoms of all people, fraud has always existed and WITH government intervention, fraud is much more pronounced and severe and of much greater magnitude. Too big to fail does not happen in the free market, it requires enormous amount of money being printed by the Fed, enormous amounts of backstops, various fake insurances by the government, programs that push for lower and lower lending standards, artificially low interest rates.

AAA debt is only marked AAA because of the monopoly status that government grants to the rating agencies, the moment one of those agencies even dares to suggest that the gov't is NOT AAA in fact, it gets investigated, licenses get suspended (Egan Jones), there is only corruption in government, government exists to corrupt.

Politicians manipulate the markets, in fact the biggest insider traders are politicians, be it Congressmen or Senators or their staff members. The real corruption happens at the behest of the government officials and departments, not despite but because of it.

Re:lower costs

[Anonymous Coward]

I like the kind of "government manipulated market" where I stand a decent chance of not getting ripped off when conducting a business transaction, and not being forced to pay to bail out a business operation that made a risky gamble of their own and lost. Call me crazy, but I like the idea of a government that expends some resources (paid for by me) to discourage fraud before it happens rather than always spending the resources to clean up the mess after it has happened.

If the costs of regulation are lowered too much by eliminating regulations indiscriminately, then I have to be willing to accept that I'll be ripped off a lot more frequently by scams than is already possible, and that the people responsible will only have to close down their fraudulent business and re-open a new one as the main inconvenience for their crimes. No thanks. We should always be mindful of overly complicated regulations stifling legitimate business, but the late 19th and early 20th century was no financial utopia because there were fewer regulations than there are now. The regulations that financial institutions chafe under today are there because of past abuses on a grand scale, not because there's some perverse drive to complicate their business and drag down the economy. If we could trust them, it would be great. But obviously we can't. They're quite willing to burn the entire house down if they can make a buck at it. We've had a very recent reminder. And anyone who thinks we can just take those regulations off and everything would be better doesn't know history.

There's an old saying that the price of freedom is eternal vigilance. Same for financial regulations if you want business to be honest.

If you want a good example of the difference between good regulation and bad regulations, compare the performance of the US banking system to Canada's. Pay special attention to the number of banks that failed in the US versus Canada in the 1930s and in 2008. Economically, the US economy is a lot more robust and diversified, but it's banking system is still prone to crazy fluctuations by comparison. That's the questionable benefit of less regulation: higher highs, lower lows, and a lot more volatility. Before 2008 Canada's banking system was not regarded as particularly interesting in terms of growth prospects. It was boring, in fact. There was ample pressure from banks to implement the kind of deregulation that had happened in the US years before in order to remain "competitive". Draw your own conclusions about the results of this kind of restrictive "central planning".

Re:lower costs

[Anonymous Coward]

You mean like not having a budget, and spending literally trillions of dollars a year more than you take in?

So, in effect you're saying "since government can be inefficient, we should scrap all rules which keep corporations from committing outright theft"? Yeah, that'll fix the problems.

You're an idiot.

Says the USELESS fool who apparently has faith in the same governement that sics the IRS on political opponents, the same government that ignores the law to delay implementation of health care reform, the same government has the NSA reading everyone's every email, the same out-of-control government that spends hundreds of millions of dollars a MONTH more than it takes in, the same government that conducts "extrajudicial killings" of US citizens?

And that's all in the past handful of months.

Yet you call ME an idiot?

Coming from you, that's a compliment.

Let's see, it's been what? 6 years since Booooosh!!!! was President. It's been 8 years since Democrats took over both the House and Senate.

So tell me, you brain-dead dumbfuck self-appointed delusional wanna-be, why does workforce particpation rate in the US continue the rapid decline that started about the same time DEMOCRATS took power in Washington? BOOOOOSH's fault? Yeah, right. Can't be Obumbles, Pelosi, Reid, et al. Oh noes! Not THEM, even after they've being in power for YEARS. It's gotta be teh Eeev-il Rethuglicans!!!!

You are one delusional fool.

Re:lower costs

[Anonymous Coward]

- correct, there is a secondary reason, which is buying votes of the idiots, that believe that the government must regulate everything because some of them are corner cases, and some of them got conned and because 1-10% may lead to some loss or there is a con artist in 5% cases, now 100% of businesses must suffer through regulations.

Right on comrade! Once again roman_mir shows us the need for virtuous and principled people like him to raise a private army to fight against all this government and the idiots who support government.

I mean, how else are you going to stop idiots from voting like idiots? They won't listen to reason (if they did, they wouldn't be idiots), so you gotta use force. Just look at how quickly the Egyptian Army was able to throw out Morsi, compared to years and years of guys like Ron Paul trying to work their way from within the system.

Even if you don't want to stop the idiots from voting, you'll need a private army to defend yourself from those idiots. Guys like roman_mir may be principled to not use violence, but you can't say the same for those idiots and the government they vote in. Just look at what they have done, are doing, or threaten to do to guys like Manning and Snowden and Assange.

Re:lower costs

[stenvar]

Banks and their high-frequency trading is just trying to take a cut out of the market before anyone else gets a chance. Why should trading institutions have privileged access to the market to pad out their own bottom line and skim the money off before everyone else can?

Of course they shouldn't. But they have those privileges courtesy of government regulations, regulations which make it next to impossible for new competitors to enter the market and offer cheaper and better service. Financial regulations prevent some fraud, but it also perpetuates this system that rips off people on a massive scale.

Re:lower costs

[Anonymous Coward]

Google "apple debt" and you will see that instead of repatriating that cash to the US and paying $9.2B in taxes they are issuing multiple billions in debt to fund the buyback.

Why would they possibly pay US taxes when they can just issue bonds and keep that money overseas?

Re:lower costs

[Anonymous Coward]

But of course the money would get transferred before Apple defaulted on its bonds. Anyway, what's the relevance?

Re:lower costs

[Archangel Michael]

You are under the mistaken impression the government stops fraud, while at the very same time, saying that it didn't stop fraud. Tell me again how that works?

Government doesn't stop crimes by regulations, it just makes the market less efficient.

Re:lower costs

[khallow]

government can be inefficient, we should scrap all rules which keep corporations from committing outright theft"?

Well, would you invest in such a market? I doubt it. But you might, if dear, ole, inefficient Uncle Sam promised that this time (really, he means it!), he'll get those robbers rather than bail them out once again. The lulling of our sense of caution is one of the primary duties of government regulation of the stock markets.

Re:lower costs

[Anonymous Coward]

When you write like that you come off as insane.

Dark pool, eh??

[rodrigoandrade]

That's going to be the new financial mumbo jumbo that will destroy the economy again in another 10 years or so??

Re:Dark pool, eh??

[localman57]

At least this one sounds sufficiently evil. "Secured Debt Obligation" sounds like it should be secure. "Credit Default Swap" sounds confusing, and probably not something you would want to mess with ("Why would I want to swap defaults?"). But Dark Pools? That sounds good and evil.

Re:Dark pool, eh??

[Teancum]

This isn't really any voodoo here, and it is something stock brokerage companies have been doing for decades or even from the very beginning. If you have two customers where one customer is trying to unload some stock and another is trying to buy the same issue of stock.... why not simply exchange the stock certificates between the two customers without having to go through the big stock exchange?

The point is that these trading companies sometimes have thousands of trades going on all of the time, sometimes with customers having "put" or "stop" orders in place to buy or sell at certain prices. On the whole it really does make the markets much more efficient because the only time you go to the "big boards" is when you have a large number of your customers either all trying to sell or buy a particular stock issue.

This is certainly not something that will "destroy the economy", but rather that it will even help make the "economy" run even better by making sure that those who are either buying or selling shares can get the best possible price among the most number of people who may be interested in either buying or selling that stock. It also keeps stock brokerage costs down, thus lowering your fees for making an individual transaction. In other words, this makes it much easier for "ordinary people" to get involved with the stock market if you really care to do something like that. The New York Stock Exchange was explicitly set up with this kind of arrangement in mind, where people "with a seat" would carry on major transactions on behalf of trading companies, and ordinary people would contract out with those trading companies if you wanted to make occasional trades or buy in low volumes.

That there are problems with brokers and reasons to be concerned about how they are handling your money is something to be concerned about, the mere fact that "dark pools" exist isn't one of those things to panic over. If they didn't exist, all trades would need to happen on the major exchanges and would be a whole lot more expensive with much higher fees. The end result is that it would cause the world economy to collapse if they were outlawed or something else equally stupid. That brokerage houses should be expected to be honest to their customers is what this whole story is about, not the existence of these trading environments.

Re:Dark pool, eh??

[Rockoon]

Unless you have anything to back up any of your statement, which for the uninformed, may otherwise look believable, or even plausible?

His statements are backed up by the observations of the new upper middle class slashdot that you didnt grow to be a part of. You see, when you earn a decent living it is in your best interest to learn the mechanics of stock trading, which most of the successful on slashdot have done.

Brokerage houses arent magic undecipherable black boxes. Not only can you actually learn the mechanics of how they work, its actually easy to do so. Try the public library, or this new fangled internet thing. I've known that brokerage houses handle trades in-house before going to the exchange for almost 3 decades, because I decided to learn something about trading stocks before getting involved. I learned it from books freely available in the public library, books produced specifically as primers for the average person that wanted to know more before getting involved.

I know its a radical idea, but learning about things is often quite easy.

Re:Dark pool, eh??

[Anonymous Coward]

> It also keeps stock brokerage costs down, thus lowering your fees for making an individual transaction.

Do you know how silly that sounds? The CEO of the NYSE had a salary of $140 Million before bonuses in 2011. I have a hard time believing they are working for our best interest. Excuse me while I go vomit.

Re:Dark pool, eh??

[Anonymous Coward]

Had you done as much reading as you claim you would understand how robo-trading and Hedge funds are not on the up-and-up nor is there a level playing field. Maybe you should go back to the library?

Re:Dark pool, eh??

[dywolf]

this is /.
all banks and financial institutions are the devil!
how dare you explain how things work in reality without hyperbole and fear mongering!!

Re:Dark pool, eh??

[Anonymous Coward]

NYSE/Euronext is not a dark pool

Re:Dark pool, eh??

[Teancum]

> It also keeps stock brokerage costs down, thus lowering your fees for making an individual transaction.

Do you know how silly that sounds? The CEO of the NYSE had a salary of $140 Million before bonuses in 2011. I have a hard time believing they are working for our best interest. Excuse me while I go vomit.

If you think you can do a better job by providing a cheaper service and help out more people..... then get off your ass and form the company and do it !

Seriously, I don't understand why there are communists who think it is wrong for people to make a profit off of their activities. There isn't anything fancy or special here, and not much stopping you from competing against these companies other than a lack of will and putting a whole lot of effort into this. The New York Stock Exchange started out with a bunch of guys gathered out in a park under the "Buttonwood trees" that happened to be on Wall Street (then the city limits for New York City... literally on the edge of town hence the "wall" of Wall Street was the town fence against the Native Americans who also lived on Manhattan at the time). The only advantage that these particular CEOs have over you is that they started doing this first, and that their companies have been persistent.

Re:Dark pool, eh??

[Anonymous Coward]

... This is certainly not something that will "destroy the economy", but rather that it will even help make the "economy" run even better by making sure that those who are either buying or selling shares can get the best possible price among the most number of people who may be interested in either buying or selling that stock...

Perhaps you missed the part where this form of trading is essentially a closed shop and actually larger than the "economy."

Re:Dark pool, eh??

[Teancum]

Perhaps you missed the part where this form of trading is essentially a closed shop and actually larger than the "economy."

Nope. I don't know how it would be "larger than the actual economy", as it is a part of the national economy... by definition. It will always be smaller than the economy because it is a sub-set of that economy.

That it might be larger than the public trades is true, but that isn't the problem either. Collusion between multiple "dark pools" is a problem where prices are manipulated, and in theory trades between multiple dark pools could essentially bypass the main market entirely even for setting prices.... or at least increasing volatility (instead of the usual reducing volatility effects of dark pools) because there aren't competing "dark pools". I'm not saying that everything is peachy keen and awesome with dark pools, as there certainly can be some major problems. The issue isn't with dark pools in themselves though, as that really is a good thing.

As for the "closed shop" aspect..... I really don't know what you are talking about there. That some of these "dark pool" operators might restrict who can trade within that pool may be true, but if you are complaining go start your own pool and get a seat on the NYSE or other exchange (or at least work with somebody who has a seat on one of those exchanges). It takes some trade volume and money to get the attention of some of these traders, but other than some bureaucratic red tape thanks to our government literally anybody can get onto those exchanges. It isn't nearly as closed as you may suggest. People on Wall Street don't give a damn about your skin color, country of national origin, language you speak, eye color, gender, religion, sexual orientation, or any other identifiable trait. For all they care, you can even be a lesbian Klingon. All they care is that you have some money and want to buy or sell stock shares in public companies.

I certainly fail to see how operating a dark pool can possibly "destroy the economy" now or in the future. There are many other things to worry about that actually will damage the economy and perhaps even destroy it.

"have to be the same or better"

[Anonymous Coward]

How can a quote be "better"?

If the quote is eitehr higher or lower than the visible market rate, either the buyer is being underpaid, or the seller is overpaying, neither situation is "better".

Re:"have to be the same or better"

[aBaldrich]

Maybe the spread is smaller?

Re:"have to be the same or better"

[lgw]

How can a quote be "better"?

Well, Slashdot quotes would be better if we could specify who we're quoting, but you probably meant a market "quote". Assuming TFS means "bid or ask", it's better if it's better for each party trying to trade. That doesn't mean that either the buy or the seller is getting a bad price.

The usual state of a market at any given moment is that a "bid-ask gap" exists - when the best price someone is willing to buy at is lower than the best price someone is willing to sell at, so no trade can happen just at that moment.

Market makers make their money in between the bid and ask, by doing "time arbitrage" (not strictly arbitrage, because they carry risk). For example, if in the instant you can buy for 102, or sell for 100, the market maker might make a better offer: "you can sell to me for 100.50". He's hoping a buyer will come along before the price moves much to who he can say "you can buy from me for 101.50". Those prices are better than anyone else is offering, and still the market maker makes money - at the risk of the price moving enough where he takes a loss.

Re:"have to be the same or better"

[Anne_Nonymous]

>> How can a quote be "better"?

Size.

Try moving 1,000,000 shares when the bid/offer on a listed exchange is for 10,000 and see what final price you can get.

Re:"have to be the same or better"

[Teancum]

I heard a funny story about the 1929 stock market crash, where in the middle of all of the sell orders somebody on the exchange decided to write up an "ask 1" order for 1000 shares of a major company that had been trading at about 50 dollars previously.... sort of as a joke just to see if anybody was that desperate. The shock was when the bid was accepted as there were order in to sell at any price.

Your general explanation here is spot on though. It is one of the ways that traders can make money for themselves if they spot a large gap and can identify a potential trend in the near future. This is also a good thing so far as it does make the markets much more efficient, noting that traders don't hang onto shares of companies like this.... their only motive is just to buy the shares and unload them a short time later. It helps the markets because it can help smooth out the ups and downs of the market and make it possible for trades to actually go through when people want to buy or sell their shares instead of needing to wait.

Re:"have to be the same or better"

[ggraham412]

It is legalese - in other words, if you give a buyer a lower (better) price than offered, or a seller a higher (better) price than bid, then the regulators won't come after you.

It is the complementary case where you give a buyer a higher (worse) price than offered or a seller a lower (worse) price than bid that attracts regulatory attention.

Re:"have to be the same or better"

[Bob the Super Hamste]

I have no idea either and I read the whole article which does use the ambiguous phrase of better. As others have mentioned maybe it means a smaller spread but then I am not a finance guy but given how it affects just about everything I try to stay somewhat up on things.

Re:"have to be the same or better"

[PacoSuarez]

This usage of "better" is completely standard, and it's always from the point of view of the liquidity taker: A quote is better if it gives the other side a better deal. This is consistent with common language usage.

In other words it means "higher price if it's a quote to buy, lower price if it is a quote to sell". "Better" is a much better word.

Re:"have to be the same or better"

[wren337]

My problem with this is, you can't say what the "market" price is when so much of the bidding is in dark pools. You can't look at a 1/8 or smaller sliver and say "that's the market price" - your participation in that market would have changed the price.

Re:"have to be the same or better"

[Rockoon]

If the quote is eitehr higher or lower than the visible market rate, either the buyer is being underpaid, or the seller is overpaying, neither situation is "better".

So much evidence of a complete lack of knowledge of the market in a single sentence.

Re:"have to be the same or better"

[lgw]

And that's a very good point. You have to depend on cross-market arbitrage to keep prices fair - and there's a real financial incentive to market makers to perform that arbitrage. If there's some hidden incentive here to not do so, it could really distort markets (no clue what that could be, but you can't trust these guys).

Re:"have to be the same or better"

[Teancum]

My problem with this is, you can't say what the "market" price is when so much of the bidding is in dark pools. You can't look at a 1/8 or smaller sliver and say "that's the market price" - your participation in that market would have changed the price.

That isn't really true. The "market price" is what the big board say it is, thus the "market of last resort". The point of the article in question is that apparently some of the brokerage houses are trying to shave off a few points to pad their profits by selling customer's stock purchases at prices below the actual market price and buying stock at higher than market price (at least what the customers think is selling and buying of those shares). That kind of thing, even with a few cents difference can add up to a whole lot of money and is one of the things that is being investigated..... .... at least if you did the remarkable thing of actually reading the effing article.

The other problem is that the dark pools are interconnected between each other, thus they don't even go to the public market any more. The ideas of the public market is that when you have exhausted your dark pool and have a whole bunch of customers leaning one way or another, you take those trades to the public market. If there are other "dark pools" and groups of customers who are in a position to react to changes in the market (buying shares when the price drops or selling with the price goes up), everything works exactly as it should.

The problem is when you have interlocking dark pools outside of the market, causing the concern you are having. If all of the brokerage houses are ignoring the public market, then the actual market doesn't reflect the true price.

got a dark pool out back

[Anonymous Coward]

and a little house over the top. No way I get near that lessen I have to.

How is computer-trading different from telegraph?

[mi]

When telegraph was first used to pass data (both trading orders and share price-affecting information) around, I'm sure, it was also seen by some as "dishonest", "unscrupulous", and "disadvantaging small players"...

REG NMS

[Anonymous Coward]

Wasn't reg NMS put in place to ensure that trades only occur within the NBBO (National Best Bid and Offer).

So yes the quotes are unknown, but you will only trade within a known range (depending on the spread of the NBBO). Otherwise you just have an unfilled order sitting in the pool.

Re:How is computer-trading different from telegrap

[Rob Riggs]

When telegraph was first used to pass data (both trading orders and share price-affecting information) around, I'm sure, it was also seen by some as "dishonest", "unscrupulous", and "disadvantaging small players"...

The difference you are looking for is between "telegraph" and "network", and "human" and "computer", not between "computer" and "telegraph".

Fun with names

[Tailhook]

Junk bonds, liar loans, "derivatives", "subprime", EFTs, dark pools, etc. Yes, it's a new bubble. Yes, the regulators are 45 steps behind.

You can't make liquid financial markets safe. You can only outlaw them after they emerge, and unless you're willing to employ gulags and torturers you can't prevent them from emerging.

This is why you're supposed to keep your pension funds, endowments, real property and other critical assets out of liquid markets. It is disappointing that doing this means they're not going to grow 8% a year, but juicy returns require big risks.

We use to understand this but hey, working for a living sucks so abso-fucking-lutely everything has to be hung out on the precipice to return enough dosh. So we employ righteous hyper-statists to punish anyone that might jiggle system a bit and upset all that tasty income. Every few years a new regulatory regime blossoms on top of all of the existing ones to make sure nobody tampers with the magic money faucet.

Keep printing Ben. There aren't enough lawyers on the planet to keep that bubble under control.

Re:Fun with names

[dkleinsc]

This is why you're supposed to keep your pension funds, endowments, real property and other critical assets out of liquid markets. It is disappointing that doing this means they're not going to grow 8% a year, but juicy returns require big risks.

When the pension funds, endowments, etc were buying up various mortgage-backed securities, they were buying what they were told was AAA-grade investments. That's the same grade the rating agencies give US Treasury bonds (actually, for a little while it was a better grade than US Treasury bonds), and even now US Treasuries are pretty universally perceived as the safest investment on the planet. Another way of saying this: The big banks took turds, worked with the rating agencies to polish them up really nice, sold them as gold, and then successfully ducked responsibility when it turned out that they were still turds.

And yes, there were US federal regulatory agencies that at one time would have stopped this. They didn't, and it's a disgrace that they didn't, but that doesn't mean that we shouldn't have the agencies, it means that the people who didn't do their jobs at the agencies should be fired and replaced by people who will do their jobs, and the bankers who committed these kinds of fraud should be spending a while in PMITA prison so that they will be less tempted to do it again.

Re:Fun with names

[ebno-10db]

unless you're willing to employ gulags and torturers you can't prevent them from emerging

I wasn't aware the SEC employed gulags and torturers. Is there an SEC gulag hidden deep in the interior of Alaska, of do they just rent space at Gitmo?

So we employ righteous hyper-statists to punish anyone that might jiggle system a bit and upset all that tasty income.

Being a philosopher means never having to address reality. Which one are you a fan of, Ludwig, Murray? To avoid ideological cognitive dissonance ignore the fact that between 1933 (Glass-Steagall) and 2007 we had the greatest amount of statist intervention, and the most stable and trusted financial markets in history. Many fortunes were made off it too. The whole thing went to hell in the late 90's when they started being less statist. Like I said though, just ignore that.

Re:Fun with names

[slew]

Actually, it was slightly more problematic that you describe.

The pension funds, endowments, etc, are required to invest a large portion of their money in securities that are AAA-grade because that is what was required by their charters because the need to reduce their risk profile. As it stood, GNMA (the government backed version of mortgage securities) effectively created a non-treasury AAA-grade mortgage-backed security that had an artifically higher rate than treasuries (both govt backed, but one based on the mortgage interest rate minus a few points), but unfortunatly there weren't enough mortgage-backed AAA-grade securities to go around, because if your "neighbor" investment manager is juicing their return rate with these, you want part of the action yourself, or you'll fall behind and look bad. The investment managers of the pension funds/endowments, etc didn't necessarily want good investments, they just wanted investments that fit their charters and could legally buy, but returned a similar rate of return as the standard AAA-grade mortgage-backed security which were in short supply.

Of course when you tell people you want to buy something, they can often produce what you tell them you want, but that's not always what you really need.

Big pension funds, endowments, etc, basically colluded with the big banks and the rating agencies to manufacture AAA-grade investments out of other crappy mortgage-backed securities + insurance contracts. All this other junk was a cheap knock-off of the GNMA (guaranteed by insurance contracts instead of the government). Of course, unlike the US government, insurance companies (like the greek government when part of the EUROzone) can't print money, so when all hell breaks loose, they need to be bailed out.

You make it seem like these big banks and rating agencies pulled the wool over eyes of the big investment managers of the pension funds and endowments and sold them lemons, but the truth is, they were all colluding together to create this mess. Think of it as if these investment managers as the big-fish gamblers in a back-room, vs Las Vegas. Regulators can help in the Las Vegas case, but neither side really wants regulators in the back-room case (because no big-fish gamblers complain when they are up, but they often cry foul when they are down).

Of course the small pension funds/endowments were the small-timers that got fried because they were mostly just following the trend of the big fish (which sadly, is how most people invest). The reality is the the big fish play a totally different game than the small fish, but the small fish usually don't see it.

Re:Fun with names

[Anonymous Coward]

As some one who spent a lot of time reading and implementing 1940 investment acts, which regulate pension and mutual funds, the summary by DKleinsc is correct. The actual regulations only require the security have a minimum rating. As long as the security (stock, bonds, etc) has a minimum rating, pensions and mutual funds may invest up to a certain percent of the portfolio. 1940Act is also common grouped in diversification rules. For example, funds can't exceed a certain limit within a given sector, industry and industry group. The problem and challenge with CDO and hedge funds is the "actual" risk and rating is hidden. When the market crashed, many 401K, pension and mutual funds look 30-40% loss because the fund managers didn't know the real risk. They wanted in on the "profitable securities" and went along with the game. They should have dug deeper to see what the actual risk and exposure was, but as we know (hindsight being 20/20) many of them didn't.

Re:Fun with names

[dkleinsc]

That doesn't change the story too much: Either the banks and rating agencies hid what they were doing from big investment managers, or banks and rating agencies and big investment managers hid what they were doing from the ordinary people that ostensibly owned the assets.

Re:Fun with names

[Tailhook]

I wasn't aware the SEC employed gulags and torturers.

I wasn't aware the SEC was effective.

Re:Fun with names

[Anonymous Coward]

If you look at the history of the SEC, it was effective for many years. Starting from Reagan erra to now, the SEC has been slowly stripped of their power. SEC was effective in the past. SEC can be effective again, if they are given the power to go after the bad guys and new leadership is installed in the SEC.

Re:Fun with names

[ebno-10db]

If you look at the history of the SEC, it was effective for many years. Starting from Reagan erra to now, the SEC has been slowly stripped of their power. SEC was effective in the past. SEC can be effective again, if they are given the power to go after the bad guys and new leadership is installed in the SEC.

Thanks for the effective rebuttal. Quoting in full just to get it off score 0. To the best of your knowledge, back when the SEC was effective, did they employ "gulags and torturers"? I though it was mostly people in suits, but Tailhook doesn't seem to think that could possibly have been effective. Cognitive dissonance and all.

Re:Fun with names

[Anonymous Coward]

If you look at the history of the SEC

Here is a NYT headline from 1970; "Sluggish S.E.C. Is Facing A Pile of Unsettled Issues; Many of Critics in Securities Industry Blame Chairman Budge."

The whole "it use to work but the repubwikins messed it up" meme is coming up on about a half century and predates your Reagan thesis by more than a decade.

I have looked at the history of the SEC. I read the Madoff investigation transcripts. About a hundred hours of effort there. You know what the SEC is? It's a sitcom; a bunch of lawyers running around 'dating' each other and doing their level best to avoid any actual work or decision making.

Here is a quote from the SEC IG report about the failure of the SEC during four different audits to discover any fraud:

In addition, it is noteworthy that one of the staff attorneys involved in the examination stated that it was not uncommon for projects to just “die off” without coming to an appropriate conclusion and stated he often did not get any feedback or direction on his work.

There is no lack of authority. No lack of money. They're not understaffed. It's just dysfunctional. There's nobody home. A bunch of empty suits.

Has it been fixed since then? See MF Global.

Re:Fun with names

[ebno-10db]

Here is a NYT headline from 1970; "Sluggish S.E.C. Is Facing A Pile of Unsettled Issues; Many of Critics in Securities Industry Blame Chairman Budge."

Wow, criticism of a government agency. Stop the presses! One headline is clear proof that the SEC was completely ineffective.

I read the Madoff investigation transcripts.

Really? All of them? Suffer from insomnia much?

BTW, the Madoff case does backup the "Reagan started the decline" idea, since they started investigating Madoff in '92.

No lack of money.

The SEC has been progressively defunded over the years.

There's nobody home. A bunch of empty suits.

So you're saying we need a stronger, more effective SEC? I agree.

Re:Fun with names

[Anonymous Coward]

Posting anon since I modded.

"Junk bonds, liar loans, "derivatives", "subprime", EFTs, dark pools, etc. Yes, it's a new bubble. Yes, the regulators are 45 steps behind."

Those are very, very different things. A junk bond is just a bond with a low credit rating (high risk of default). They're known more properly as High Yield (HY) paper as opposed to investment grade (IG) because they pay better, but involve more risk.

Derivatives are very broad category. They include everything from vanilla call options, to interest rate swaps, to whatever OTC thing you can dream up and Goldman can find lawyers to write up, to (arguably) a fixed rate home mortage.

"Subprime" simply refers to the practice of lending to people with bad credit. It's not an asset.

EFTs - I assume you mean ETFs. They're just a convenient way to allocate your investment. For example, for most people buying shares of GLD is much simpler than buying physical gold or rolling futures. They can actually be a pretty cost effective way to invest in a broad market index like the S&P 500.

The rest of this is just nonsense by somebody dropping terms he doesn't even understand.

Re:Fun with names

[Anonymous Coward]

That doesn't change the story too much: Either the banks and rating agencies hid what they were doing from big investment managers, or banks and rating agencies and big investment managers hid what they were doing from the ordinary people that ostensibly owned the assets.

People that contribute to a pension fund thinking that they are professionally and ethically managed are either: required to, or stupid. They are all political venues run by people that care more about the money they make rather than the money they are responsible for.

For example, one of the world most widely respected pension fund, CalPERS. Originally, they were chartered to only make conservative investments to support a modest pension return. However, eventually, the charter changed over time. In 1966, up to 25% of the portfolio could be invested in stocks, in 1984, the portfolio was changed to be open-ended (they could invest in anything). In 1999, in response to a stock market boom that caused public sector folks feeling left behind, a huge generous pension expansion was voted in to being causing huge pressure for continued high returns in excess of 8%. This was right before the crash of 2000.

As a result, CalPERS also got caught up in that CDO mess, not buying the top "rated" AAA tranche, but $140M of the bottom rung totally un-rated "equity" tranche. It is speculated that they did this as both a panic move to attempt to boost their returns and as reciprocity favor to Citigroup to for acceding to their demands to change their board makeup (they lead the opposition to renominating ceo/director Sandy Weill in '03).

Perhaps, that $140M panic buy of junk equities was to cover for the $970M in LandSource only a couple months before they filed for bankruptcy protection and the $500M in Peter Cooper Village and Stuyvesant Town in NYC or the other $7B in Real Estate they bought in Florida and Arizona and the generous pension expansions that were voted in '99, but were unfunded after the 2000 bust.

Of course that's just the investment side of it. CalPERS former board members (Al Villalobos and Fred Buenrostro) ran a pay-for-play "agency-fee" scandal that netted over $70M championing these investments to the board. To top it off, the chair of the investment committee (Charles Valdes) filed personal bankruptcy twice during the term he was serving.

I don't think they are "hiding", people simply don't care enough to care about it to demand change.

Re:Fun with names

[Anonymous Coward]

You can't make liquid financial markets safe. You can only outlaw them after they emerge, and unless you're willing to employ gulags and torturers you can't prevent them from emerging.

Bollocks.

A simple law would fix it: "It shall be a felony to offer a financial product for sale that does not strictly conform to one of the financial products authorized by law."

For good model of this, look at Medicare supplement insurance plans. It's a felony to offer one for sale that doesn't exactly conform to Federal requirements. Insurance companies have absolutely no freedom to experiment with new types of Medicare supplement plans. That's because everyone knows that the only purpose of any new types of plans would be simply to screw customers. All financial products should be locked down at least this tightly, with felony convictions for violators.

Financial services should be treated as utilities, just like garbage and sewer. All financial products should be regulated at least as strictly as your water bill rates. Innovation is very rarely needed in financial products. The last useful new financial product was the ATM machine.

Re:Fun with names

[Anonymous Coward]

it means that the people who didn't do their jobs at the agencies should be fired and replaced by people who will do their jobs

That's not enough.

We need actual changes to the system, such as:

1: Cash bonuses for regulators who uncover violations.
2: Creation of an "internal affairs" division that investigates regulatory capture and bribery.
3: Strict eligibility laws to eliminate the "revolving door" of people between industries and their regulators, again with internal affairs investigating possible connections.
4: Creation of an inquest process for regulators who are caught.
5: Empower the inquest panel with the ability to fire, up to an including firing the top management.
6: Allow private companies to investigate regulatory violations, with payment based on the severity of the violations uncovered.

Re:Fun with names

[Anonymous Coward]

As far as I know, the SEC did not employ gulags. Someone else made that comment, I'm a different anon coward. Still a anon coward, since I've worked in the financial sector and got to see "how the hot dog is made" I no longer trust large financial institutions. The issue I see isn't that there's isn't enough regulations. In fact there's sufficient regulations to make things work. What is lacking is political will, ethics, morality and honesty. If the "elected officials" listened to the public, they would pass super Glass-Steagal act (https://en.wikipedia.org/wiki/Glass%E2%80%93Steagall_Act). Instead they listen to large corporations and super rich. History shows that Glass-steagal act stabilized the economy. As parts of Glass-steagal act were reversed, we began to see "bad" things happen. People are studying the wrong things in history class and forgetting the lessons others already learned.

Re:Trusting banks

[SirGarlon]

Or you could say Obama got a second term because the voters still remember George W. Bush.

Nah, it ain't about that.

[Impy the Impiuos Imp]

The real reason is to bribe politicians by writing down their name at the end of the day on the most profitable trades.

Hillary Clinton once had 29 of 31 IPO trades work out profitably for her, a success ratio neither God nor the Wall Street Journal had ever seen before.

FINRA?

[QuietLagoon]

there is a current investigation by FINRA

FINRA tries to pass itself off as an independent regulator of the financial industry.

.
Just take a look at the firms that make up FINRA and you will see what a farce it is to use FINRA and financial industry regulation in the same sentence.

Re:FINRA?

[Bob the Super Hamste]

Which is why I linked to the wiki page on them so that anyone could look and see that they are a self regulatory body for the financial industry: In the United States, the Financial Industry Regulatory Authority, Inc. (FINRA) is a private corporation that acts as a self-regulatory organization (SRO)

The real "independent" body is the SEC but they seem to want to sit on their hands waiting to get cycled back into private industry where they can make real money instead.

Re:How is computer-trading different from telegrap

[localman57]

How is computer-trading different from telegraph?

When telegraph was first used to pass data (both trading orders and share price-affecting information) around, I'm sure, it was also seen by some as "dishonest", "unscrupulous", and "disadvantaging small players"...

Now I'm disappointed. When I saw the title, I thought there was gonna be a funny punch line.

Re:Trusting banks

[Anonymous Coward]

That and we got a good look at his opposition. The Republicans put on a clown show in 2012 with the candidates trying to out-derp each other to appeal to the far-right religious nutjobs that make up the Republican base. I don't see that changing any time soon.

modern markets are just gambling.

[nimbius]

Automated trading systems are far different than whats intended for a working stock market...one could make a compelling argument to suggest automated trading was by its design made to quickly and quietly abdicate the big players from any sense of liability or responsibility for a crash. If for example automated trades dont go the way wall-street firms like, they can have them rolled back. its not selling a share, its not cancelling a buy, its literally going into the system and undoing the trade. HFT is based on algorythms that themselves are as unfounded and hypothetical as the very modern theory of economics. Market Making, or as we know it to be pump and dump, is a real algorythm employed daily by firms.

dark liquidity markets take this a step further, but HFT has cataclysmic potential here. the buyer and seller are generally not known, quantities can be limited for sale or purchase, the markets themselves are not available to the general public, and there is very minimal oversight. The dark market was invented for the financial sector. its purpose is to silently enjoy the benefits of things like credit-default swaps and predatory lending, but without having to atone for their sins on the open market once they start printing the eviction notices.

Re:modern markets are just gambling.

[Anonymous Coward]

Unless both parties agree it is very difficult to reverse a trade.

Only if the trade was extremely unreasonable (on price and size) will a trade be reversed by the exchange. Unreasonable meaning that it would wipe out a firm, or because of technical problems at the exchange (yes the flash crash was in part caused by a technical problem at the exchange, reporting prices which were 5 minutes old).

Re:modern markets are just gambling.

[smellotron]

If for example automated trades dont go the way wall-street firms like, they can have them rolled back.

I keep hearing this, but nobody seems willing to provide the evidence. Can you cite a recent example? The "flash crash" on May 6, 2010 prompted the standardization of trade bust rules, which AFAIK shut down any discretionary-bust shenanigans.

Market Making, or as we know it to be pump and dump, is a real algorythm employed daily by firms.

You are wholly incorrect on this. Market making is the practice of putting two-sided quotes into the market to provide liquidity for others to trade against, with the incentive of capturing the spread when volatility is low. Market makers make the most money when prices oscillate around a small range. Pump and dump is the practice of publishing false information with the expectation that it will materially move the market price, but only temporarily. Pump-and-dumpers want to capture one single big price movement, and they are likely to be liquidity takers.

The house always wins

[Anonymous Coward]

And like gambling in a casino, the people in charge of the trades always get their cut one way or another. All the regulations do is limit the ways in which they can legally scam the players. The ordinary players are the main losers, and the broader public is too when the whole Vegas Strip/stock market suddenly goes under at once and jeopardizes the entire economy. Maybe it doesn't happen this year or next, but the whole thing has transitioned into a gambling operation rather than a thoughtful and long-term investment. The only guaranteed returns are the guys charging their fees to play the game.

Your Money in "Dark Pools"

[BoRegardless]

What could go wrong with Vinny and your money?

Re:Trusting banks

[ebno-10db]

That and we got a good look at his opposition. The Republicans put on a clown show in 2012 with the candidates trying to out-derp each other to appeal to the far-right religious nutjobs that make up the Republican base. I don't see that changing any time soon.

To be fair, that was only the warmup act. They wound up running Gordon Gekko in the midst of the worst job market since the Great Depression. I wonder why they lost?

It's about prices.

[lasermike026]

I worked at a dark pool.

When a whale buys or sells a sizable amount of stock in the public market it moves the price. When they execute the trade it doesn't happen all at once but in blocks. When bids and offers are made other players in the market see it and they try to jump on. This moves the price. The whale would like the price not to move so they can maximize profit. When trades are executed in a dark pool the market doesn't see the trades until they clear at the end of the day. Who trades in a dark pool you might ask? Other whales. Stocks traded in a dark pool are usually fairly distributed between groups of buyers and sellers so no one trading party has an advantage.

Re:It's about prices.

[ebno-10db]

When a whale buys or sells a sizable amount of stock in the public market it moves the price. When they execute the trade it doesn't happen all at once but in blocks. When bids and offers are made other players in the market see it and they try to jump on. This moves the price. The whale would like the price not to move so they can maximize profit.

In other words, the great defenders of the Free Market don't want the markets to function if it'll cost them. In a market, if somebody is buying a lot of X, I would expect the price to go up. Supply and demand is a key part of capitalism. By your account (and I have no reason to doubt it) the dark pools defeat the purpose of a public stock exchange, which should let everybody see the prices and volumes at any time. Market theory says markets function best when everybody has as much information as possible, like current prices and volumes.

Re:It's about prices.

[Anonymous Coward]

In other words, the great defenders of the Free Market don't want the markets to function if it'll cost them. In a market, if somebody is buying a lot of X, I would expect the price to go up. Supply and demand is a key part of capitalism. By your account (and I have no reason to doubt it) the dark pools defeat the purpose of a public stock exchange, which should let everybody see the prices and volumes at any time. Market theory says markets function best when everybody has as much information as possible, like current prices and volumes.

For every dark market whale buyer who doesn't want the price to rise, there's a dark market whale seller who doesn't want the price to fall. If they get together quietly on the side and trade, it doesn't effect you at all.

Re:It's about prices.

[Rockoon]

In other words, the great defenders of the Free Market don't want the markets to function if it'll cost them.

no, in other words they want a free market where A can sell to B without C sticking his nose into it.

That thing you call an exchange is a market, but its not the only market.

Is it your intent to claim that when two people trade amongst themselves that that is not a free market? Really?

Re:It's about prices.

[Anonymous Coward]

You know who are against dark pools? HFT firms; because they believe dark pool remove information from the markets.

Re:It's about prices.

[dywolf]

whomever said the whales are the defenders of the free market? you're getting causes and effects reveresed, and confusing the open stock exchange (ie, walls treet) with a the ideal of a "free market". the phrase you want is rational self-interest

Re:It's about prices.

[ebno-10db]

For every dark market whale buyer who doesn't want the price to rise, there's a dark market whale seller who doesn't want the price to fall. If they get together quietly on the side and trade, it doesn't effect you at all.

Bull. For example, if a whale had to buy through the exchange, I could take advantage of the price rise as an opportunity to sell.

Re:It's about prices.

[ebno-10db]

You know who are against dark pools? HFT firms; because they believe dark pool remove information from the markets.

And they're right. Not that I think HFT traders should be able to buy their special privileges so they can front run, but the basic objection is completely legitimate.

Re:It's about prices.

[ebno-10db]

Is it your intent to claim that when two people trade amongst themselves that that is not a free market?

You're using the shopworn libertarian/market-fundamentalist rhetorical trick of talking about it like it was a couple of regular Joe's doing a little exchange. Guess what, I don't think garage sales should be regulated. Sell that old rocking chair and the lawn dart set for whatever you like. No sales tax either. Golly Homer, how are things around the pickle barrel these days? Should we play checkers today, or put on some bespoke suits and trade a few billion in equities?

Corporations (not "two people" as you describe), which courtesy of the government enjoy a special privilege called limited liability, trading tens or hundreds of billions of dollars in equities every day, in a way that has a major effect on everything from retirement funds to employment, is a little different matter. I'm all for keeping my nose out of the fact that you sold that old lawn dart set to your buddy for a bargain price. The stock markets that effect my retirement and my employment? Not so much.

Re:It's about prices.

[ebno-10db]

It was meant ironically.

Re:It's about prices.

[Rockoon]

The stock markets that effect my retirement and my employment? Not so much.

You want the benefits without the risks.. we get it.. you think there is a free lunch, built on the efforts of others, and that you are entitled to it.

You aren't. You are a thief.

Re:It's about prices.

[Anonymous Coward]

It's not a free market if one is forced to participate in it. If Alice sells apples to Bob, why should they be compelled to notify Eve?

Re:It's about prices.

[Anonymous Coward]

... A can sell to B without C ...

Person C isn't deciding who can buy or sell, how many can be bought, or what the price is. Person C is simply demanding that other people are honest about their trades of his company. Remember, person C is a part-owner of the company too.

... its not the only market ...

That's why multiple stock exchanges exist.

... when two people trade amongst themselves ...

You mean like when Amazon doesn't set the sale price until you log in? That is pure capitalism: The vendor judges your demand to buy and sets a supply price just for you. You get what you want and the vendor gets maximum profit. According to you that is a free market. Possibly, but it makes 'shopping around' difficult. Worse, those vendors can collude so they all inflate the supply price you receive. On the share market, all supply prices are visible. It is worse for shares because the supply price of one share affects the price of all others. That is a consequence of a free market. The whales don't like that so they create a secret market to sell their shares and avoid free-market forces. Now, there's a problem.

Re:It's about prices.

[ebno-10db]

benefits without the risks ... free lunch ... You are a thief.

Are there any more cliches you could add? Please explain how wanting an open and transparent market is being a thief.

Re:It's about prices.

[Anonymous Coward]

Incorrect. Off exchange trades must be reported to the tape within 30 seconds, not end of day.

Re:It's about prices.

[plopez]

No business person in their right mind wants a level playing field. Which is why regulations are needed to preserve free market forces.

Re:It's about prices.

[aliquis]

It's still demand and supply. The stuff is still bought and sold.

It's just that if the order can't be filled immediately at a similar price it's filled in a longer time frame without no-one getting to know about the big order and hence changing their prices / try to benefit from this short term interest in the stock.

I assume splitting the orders into many small ones and purchase through the day would have the same effect? Why one or the other alternative isn't used I don't know. Maybe it's too obvious that XYZ has bought this and that many stocks this day.

Re:It's about prices.

[aliquis]

What says your retirement funds isn't using the same markets?

Whatever they are working as they should or not I don't know but I guess they should.

In general if you yourself only buy and sell small volumes and do your purchases or sells very rarely I don't really see why you should bother all that much about how the market works. Does it really matter that much that HFT exist if you're happy with the price and keep the stock for years?

Re:It's about prices.

[Rockoon]

Please explain how wanting an open and transparent market is being a thief.

You didnt ask for an Open market. You asked for a Well Regulated market. An Open market allows A to trade with B without going through C.

Re:It's about prices.

[Anonymous Coward]

Actully it wouldn't be a free market Rockoon. By definition a free market has complete information. If A, B or C doesn't have complete information about the market, it isn't by definition a free market. You just mean unregulated.

Re:How is computer-trading different from telegrap

[Anonymous Coward]

You miss the point, it doesn't matter what entity is performing the trade, it's the fact that there are vast trades going on behind the curtain that are not available to the majority of traders. This is allowing a tiny number of privileged people to cream the best deals long before anyone even knows they exist.

What is your point

[Anonymous Coward]

Yeah, both favor those that already have money. This is just another way to do the same. Repeatedly being unfair does not make something any less so.

Re:Trusting banks

[Anonymous Coward]

Or you could say Obama got a second term because the voters still remember George W. Bush.

You saying Obama voters are fucking idiots? (Well, we all KNOW they are, but...)

Because those Bush years of steady 5-6% high unemployment were horrible, no? Those Bush years where a majority actually had a full-time job were bad, right?

Look how work force participation has fallen off a cliff starting, oh, around 2009 or so:

https://en.wikipedia.org/wiki/File:US_Labor_Participation_Rate_1948-2011_by_gender.svg

Imagine that.

Got the balls to actually LEARN something?

Here's a common-sense prediction: when Obamacare's employer mandate is finally imposed in 2015 (after an illegal year delay....), full-time employment will DROP again.

Because Obamacare makes full time employment more expensive, there will be less of it.

And we all get screwed by shallower-than-a-parking-lot-puddle idiots who actually refuse to learn and understand consequences.

Welcome to 2-party political reality

[rsborg]

So to make sure I understand you correctly. What you are saying is Obama and his management of financial regulations is so pathetic, and shamefully corrupt; your only option is to compare his actions to other hypothetical time lines to make him look better. Got it.

Well, this is the shit sandwich that passes for political choice in our era. And this article about dark pools pretty much exemplifies exactly what is happening (and has been happening) in Washington DC - the public side is a side-show only dealt with by the power players when the real "behind closed doors" private power-trading doesn't pan out.

When this is the case and when the two parties are being bankrolled by the private dark-pool players... well, you see where this is headed.

Sounds like prime time for a penny per trade tax..

[Anonymous Coward]

I can't think of a single argument where high-speed algorithmic trading is good for anyone but those who can do it, and can think of quite a few where it's bad for all the rest of us...

So... penny per trade tax... that works this out to what 17 million a day?

All of it goes into banking enforcement and prosecutions.

Re:How is computer-trading different from telegrap

[phantomfive]

This story isn't really about computer trading, it's about trading that happens before it goes to the exchanges.

Re:Trusting banks

[ebno-10db]

Because those Bush years of steady 5-6% high unemployment were horrible, no? Those Bush years where a majority actually had a full-time job were bad, right? Look how work force participation has fallen off a cliff starting, oh, around 2009 or so.

If you've got the balls to learn something, I'll clue you in on something called cause and effect. That awful unemployment rate was caused by the financial crisis of 2007–08.

Carlin explains

[Ralph Spoilsport]

It's a big club, and you ain't in it. The game is rigged, and nobody seems to notice and nobody seems to care.

They don't give a fuck about you. At All.

http://www.youtube.com/watch?v=oIFGGcX1a5I

Re:Carlin explains

[Anonymous Coward]

Correction: Very few have the emotional and mental capacity to see reality for how it is, not how they would like it to be or have been told it is.

Re:Trusting banks

[stenvar]

Obama got a second term because he had a highly effective organizing and propaganda machine, and because he lied over and over again and told everybody what they wanted to hear.

Re:Trusting banks

[SirGarlon]

In other words, the same way any president gets a second term. :-)

Re:Trusting banks

[Anonymous Coward]

Obama got re-elected because lake or hate his policies, at least he's not a complete diplomatic embarrassment.

Romney was completely unelectable, and the US political system only has room for two candidates. Which shouldn't surprise anyone as 2012 was a poor year for a Republican candidate strategically (defeating an incumbent is always hard and people largely saw Obama as cleaning up Bush's mess) so it shouldn't be surprising that they could only field candidates that don't quite grasp strategy.

Re:Trusting banks

[ttucker]

How far in the future will you consider all of our problems to be George Bush's personal fault? Ten years? Twenty?

Re:Trusting banks

[ttucker]

When you haven taken every position imaginable, it is easy to always be on the right side during a debate... particularly when you get the questions before.

Re:Trusting banks

[Terwin]

Don't forget using the IRS to harass and gather information about the strongest opposition his party faced in the 2010 election.

Re:Trusting banks

[ebno-10db]

Sad attempt at deflecting the issue. It hasn't been 10 years, let alone 20. Did you think that the biggest financial crash since the Great Depression wouldn't affect employment and the economy in general for some years after? If the 22nd Amendment didn't exist and Bush had been elected for a third term, do you think he would have waved his magic wand and fixed everything in short order?

Re:Trusting banks

[ebno-10db]

Obama got re-elected because lake or hate his policies, at least he's not a complete diplomatic embarrassment.

Romney was completely unelectable, and the US political system only has room for two candidates. Which shouldn't surprise anyone as 2012 was a poor year for a Republican candidate strategically (defeating an incumbent is always hard and people largely saw Obama as cleaning up Bush's mess) so it shouldn't be surprising that they could only field candidates that don't quite grasp strategy.

Of course it's harder to win against an incumbent, but it's been done many times. GHWB in '92, Carter in '80, Ford in '76. At least the R's could have tried. Instead they ran Gordon Gecko in the middle of a financial mess. They might as well have run ads that said "don't vote for us" or just sat out the election. As much as I dislike the 2 party system, it's much better than a 1 party system. That's what the R's gave us in 2012.

Re:How is computer-trading different from telegrap

[Rockoon]

...which isnt any different than Joe going to Bob and trading shares of a company without either a brokerage or the exchange involved.

The confused seem to think that its wrong if a brokerage is a middle-man in the trade, but somehow right if the exchange is the middle-man in the trade or if nobody is a middle man in the trade.

Its quite clear that they are simply afraid of what they dont understand, but instead of taking the (quite minimal) time to learn about the subject, they spread nonsensical FUD.

Re:How is computer-trading different from telegrap

[mi]

The difference you are looking for is between "telegraph" and "network", and "human" and "computer", not between "computer" and "telegraph".

The similarity you are missing is that in both cases new technology was/is used by some traders to gain advantage over others. In both cases the advantage thus gained is deemed — by some — to be "unfair", immoral, and — if they could do anything about it — illegal.

Re:Trusting banks

[ttucker]

Most people would think that five years is enough for someone's successor to begin to take responsibility for the state of things, so I was just wondering what sort of time-frame you had in mind. It seems like ten got some response, perhaps you think that presidents should only be considered responsible years after their presidency, it would certainly be consistent with your comments.

The real irony of this whole stupid discussion is how little the president's influence on economic affairs even is. Trying to blame one guy who has very little control over something for the outcome of said something is the real dodge of the issue.

Re:Trusting banks

[Score Whore]

They lost because fewer and fewer people in this country are willing to take personal responsibility and have out sourced all such things to someone else, generally some level of government. And a fair amount of religious bigotry, racism and election fraud. But mainly it's the first thing.

Re:Trusting banks

[Score Whore]

The real problem with the It's All Bush's Fault!(*) argument is that Obama asked for this job. The democrats asked for this job. It's one thing if you were conscripted, it's something else entirely to volunteer to take charge.

* - also note that it's fairly disingenuous to blame the president when there are 534 other elected assholes who had a hand in the mess and a bunch of them are still there still fucking things up.

Stop this shit.

[Fuzzums]

It's called speculation for a reason.
A long term investment in a company that you believe has a bright future: yes, please.
Speculation to make some quick money: die die die.

Dark pools? I don't even want to know what kind of shady way THIS is to ruin the already corrupt financial system.

And while I have the undivided attention of the NSA: Banks and stock markets. That's where you will find terrorists that ruin whole societies.

Re:Trusting banks

[Anonymous Coward]

Probably until I die, I know it's not all his fault but enough is that I can afford some intellectual laziness. Seriously he sucked

Re:Trusting banks

[ttucker]

I think it is funny that congressmen do things which are the conceptual equivalent of insider trading on a regular basis.

Re:Trusting banks

[ebno-10db]

They lost because fewer and fewer people in this country are willing to take personal responsibility and have out sourced all such things to someone else, generally some level of government.

So they should have voted for Mitt Romney? Nothing more revoltingly hypocritical than someone who was born with a silver spoon in his mouth preaching the virtues of personal responsibility. If he's so opposed to government handouts, why don't you ask him why people have to pay higher taxes on their labor earnings than he does on capital gains, why the government subsidizes leveraged buyouts by allowing a company to deduct interest payments regardless of how irresponsibly leveraged they are, and why when they fail the investors are shielded from full personal responsibility for their actions.

Re:Trusting banks

[ttucker]

He was a symbol of things that I don't like when other things that I didn't like happened, it is enough.

Re:Trusting banks

[ebno-10db]

Most people would think that five years is enough for someone's successor to begin to take responsibility for the state of things

So why didn't you ask about five years? Obama has been in office almost that long. Instead you asked about absurd numbers like ten or twenty. Why? And don't give me any bull about "I wanted to see what you thought was appropriate" nonsense. If that had been what you wanted to know, you could have asked. You're backpedaling.

However yes, Obama certainly has had an effect on the economy, by this point and for several years. He certainly could have done better (I'm not a big Obama fan, especially when it comes to economic matters), but I don't expect him to have cleaned up this whole mess by now. I also think it would have been worse with the 3rd coming of W, or McCain, or Romney.

The real irony of this whole stupid discussion is how little the president's influence on economic affairs even is. Trying to blame one guy who has very little control over something for the outcome of said something is the real dodge of the issue.

You can't blame or credit a president for everything, but to act as though he has little effect is disingenuous. The Treasury Dept., all the financial regulatory agencies and the DoJ are under him, he appoints the Fed chairman, and he has a lot of influence over legislation.

Re:Trusting banks

[Score Whore]

Your post is really fucking confused. I didn't restate what Mitt Romney said, I answered the question asked: "I wonder why they lost?" If you don't like the answer that's fine but don't put my words in someone else's mouth. For whatever else anyone claims the fundamental principle of the Democratic party is that you don't have to be responsible for anything.

Re:Trusting banks

[Valdrax]

Well, considering how many of them are also Reagan and Clinton's fault, I'd say quite a ways out. Financial deregulation and a tax code that is increasingly tilted in the wealthy's favor didn't originate with W -- he just stepped on the gas in an unconscionable way.

Of course, I blame a lot of this on Obama too, but the real villains in this time period are the Republican-controlled Congress and the filibustering Republicans in the Senate. It's they who have ground our economy to halt with their austerity during a recession madness and who have blocked all attempts to put people in charge of the bodies meant to regulate Wall Street and protect us.

Re:Trusting banks

[ttucker]

So why didn't you ask about five years?

It is called being a smart-ass. I'm surprised that you have not encountered enough smart-assery here to understand what was happening. Frankly, my intentions were tongue in cheek, and genuinely not intended to particularly offend you....

The president is not powerless to affect the economy, and as a single person he is pretty up there on the most influential list. He certainly has leverage over the congress, giving enormous economic influence. Still, to blame economic events on any single person or reason is powerfully misguided. At the end of the day, markets go up and also down... sadly they go down, and for incredibly complex, possibly inexplicable, usually compound, always global, reasons.

Re:Trusting banks

[ttucker]

There is nothing in the world more honest than a price.

Re:Trusting banks

[ebno-10db]

Sorry, I didn't it was a complete coincidence that your saying why they lost was because people don't want to take personal responsibility, had nothing to do with the fact that that was a favorite theme of their losing candidate.

Dark pool quotes

[PPH]

Should be worth zero to any organization that must mark securities to market. Or as a cost basis for securities purchases. We (our regulators) don't know what you paid for it. For all we know, that cash expenditure was for Hookers & Blow. So when you sell it, you owe cap gains on 100% of the revenue. And while you are holding those securities, your bank or broker won't loan you a penny against those holdings.

Otherwise, feel free to speculate. And good luck.

Re:Trusting banks

[ebno-10db]

It is called being a smart-ass.

No problem, I like smart-assery, but turnabout is fair play.

to blame economic events on any single person or reason is powerfully misguided

No problem, I blame congress and plenty of other douche bags. Most importantly I rarely blame a single president. W was pretty bad, but many of his predecessors, including Clinton, had a hand in this.

At the end of the day, markets go up and also down... sadly they go down, and for incredibly complex, possibly inexplicable, usually compound, always global, reasons.

Of course they always go up and down. The important question is how far do they go down. The regulation we had from the Great Depression did an amazingly good job of keeping the downs from being catastrophic crashes. That was very different from the previous history of the US where crashes (panics as they used to call them) happened with frightening regulatory. The Depression Era regulation was actually the best thing that could have happened to capitalism, but eventually people with too much money decide they should be able to eat ice cream for dinner and stay up as late as they want. The regulation wasn't dismantled in a day, but the progressive dismantling of it reared its ugly head. Financial markets need to be regulated, just as we need laws against fraud (not much difference really).

Leave the poor investors and traders alone

[plopez]

Because unregulated markets always work the best. Disregard the panics of 1819, 1825, 1837, 1847, 1857, 1866, 1873, 1874, 1884, 1890, 1893, 1907, and the Great Depression. Those were just anaomolies, as were the crashes which occurred as the market regulations were dismantled starting in the 1980s. The unregulated market is always the best.

Re:How is computer-trading different from telegrap

[smellotron]

somehow right if the exchange is the middle-man in the trade

The exchanges publish a stream of information about quotes and trades, in realtime. They don't delay trade printing by up to 30 seconds. They show limit orders in the book, which ensures a fair playing field in the matching engine. They don't allow one participant to "turn off" matching with another participant. They publish APIs, fees, and rulebooks on their web sites. For all of these reasons, I prefer to have the exchange as the middle man.

Re:Sounds like prime time for a penny per trade ta

[smellotron]

So... penny per trade tax... that works this out to what 17 million a day?

The day that such a tax is enabled, all of the professional traders will simply account for it, the way they already account for clearing fees, exchange fees, and SEC "assessments" (roughly equivalent to a transaction tax). You won't see $17M on the first day, you will see some smaller number, along with lower trading volume because of the tighter profit margins. It's a Laffer curve, so nobody knows how much lower... but everyone who understands the system knows that calculating future revenue of a transaction tax from current trading volume is a lie.

Re:Trusting banks

[khallow]

I imagine you'll find it hilarious then that members of the US Congress were able to legally insider trade until 2012 (and that's a story about a recent law limiting scope of that insider trading provision).

Re:If the question is:...srewing people

[bobkoure]

Not exactly. They're doing whatever they can in order to make more profit. That usually means screwing people (zero sum game) but that's not their purpose.

Re:Trusting banks

[Valdrax]

There is nothing in the world more honest than a price.

A fist is.

Honesty, in and of itself, does not virtue make, and a price can be quite dishonest if it does not match a thing's actual value.

Re:Trusting banks

[ttucker]

There is nothing in the world more honest than a price.

A fist is.

Honesty, in and of itself, does not virtue make, and a price can be quite dishonest if it does not match a thing's actual value.

A fist is just an asshole trying unilaterally get their way.

A price is the point where a confluence of factors determine what sellers and buyers mutually agree to. Each person, at every step of production and procurement has a say in what the price will be. If you ever really think some price is too high, think of it as a wonderful opportunity to open your own business.