Slashdot Mirror
SEC Chair On HFT: 'The Markets Are Not Rigged'
Hugh Pickens DOT Com writes "Reuters reports that U.S. Securities and Exchange Commission Chair Mary Jo White told a U.S. House of Representatives panel that she flatly rejected claims that retail investors are being fleeced by high-frequency traders who can use their speed to jump ahead with buy and sell orders that fetch better prices. 'The markets are not rigged,' says White. 'The U.S. markets are the strongest and most reliable in the world.' White's comments to the House Financial Services Committee mark the first time she has directly responded to allegations in Michael Lewis' new book Flash Boys: A Wall Street Revolt. The book alleges that high-speed traders are engaged in a form of front-running, in which the firms are able to quickly identify an investor's desire to buy a stock, rush to buy it first and then sell it back at a higher price. The SEC has been reviewing equity market structure issues, particularly following the May 6, 2010 flash crash incident when the Dow Jones Industrial Average sharply plunged before quickly rebounding. Although staff at SEC are considering whether to launch some pilot studies to test different regulatory proposals, there are no immediate plans to issue rules to crack down on high-speed trading or trading in unlit markets. 'I want to be very clear that the market metrics suggest that the retail investor is very well-served by the current market structure.'"
Looks like she's bought and paid for.
It's insanity, we are watching real life crazy people.
This is my sig. There are many like it, but this one is mine.
Pull the other one, its got bells on!
Of course the markets are rigged. It has always been that way all the way back to the 1920s. Most often the regulators where former insiders themselves, in which case they were complicit in the buddy-buddy world of Wall Street. This woman, however, just seems to be an imbecile. [I'm a 30 year veteran of Wall St and have worked on the trading floors in most of the major firms.]
If you're just pressing the "buy" button without checking the bid/ask prices and putting in an actual share value you want to purchase at, then you get what you deserve.
"'I want to be very clear that the market metrics suggest that the retail investor is very well-served by the current market structure.'"
That would be that the metrics indicate retail investors get fleeced and the big banks make earn from that. Yeap, based on past history, the retail investors are once again being well done and served up to Wall Street interests.
I highly recommend reading Flash Boys , mentioned in the Slashdot summary here. While advocates of HFT have always claimed that it provides liquidity, and it did fulfill that role usefully for a long time, we've passed a point where the gains of liquidity are overcome by the overall detriment to the economy: transactions that would have occurred anyway are penalized with what is essentially an extra tax because they came a few seconds later, and people with arcane and specialized equipment jumped the gun.
Yea, somehow banks are using HFT to magically pull money out of thin air, definitely not at the expense of traders, because traders are being so well served.
That definitely makes sense and doesn't sound like complete bullshit at all.
while(1) attack(People.Sandy);
Can the market drop 10% in the matter of half an hour?
Put your money where your mouth is, M.J. White, and tax HFT already! Curb this damn insanity!
for Joe plebb investor. There's just another level nowadays.
Nothing to see here, people. Move along. And could you put that Social Security Trust Fund money here before you go?
Either people are being front run, or they are not being front run. Can't the SEC grow a pair and actually say definitively whether people are being front run or not? I don't think the concept of front running is an obscure concept that is up for debate. Come on SEC, investigate and pass judgement. Don't give us these weasel words.
I'm largely of the opinion that HFT is a chance for the banks and trading houses to skim off the top of the stock market, at the expense of the 'normal' investors, and using information and access we couldn't possibly have.
I don't believe at all that the "retail investor is very well-served by the current market structure". In fact, I believe the retail investor gets fleeced by these trading programs.
And since there are several well known examples, including the one in the summary, in which these trading programs themselves distort the market and significantly changes the valuations of the stocks.
HFT is the large trading houses using the money of investors (their own and everyone else in the market) like a Vegas casino slot machine.
Basically, HFT is vigorish.
Lost at C:>. Found at C.
Simply tax profits on all equities held for less than 5 minutes at 100%. Problem solved.
[Insert pithy quote here]
Officer I was not speeding. Yea, that's what they all say. So, what did you expect the SEC Chairperson to say. Anything but "the markets are not rigged" would gave caused a panic. Congress took away her option to say nothing. Of course the markets are rigged in favor of the HS traders. Why else would you do HS trading but to gain an 'unfair' advantage? Let's have a regulation that requires investors to keep what they buy for 30 days before they can sell. No penalties for early sale. You just can't sell it for 30 days.
HFT is another sound argument for Network Neutrality. Fair open markets can not exist on top of a network where superior bandwidth and latency decide market winners instead of legitimate market forces.
If a nation expects to be ignorant and free, in a state of civilization, it expects what never was and never will be-T J
So, if the market's not rigged and HFT is a feature, what's wrong with introducing random delays of tens of milliseconds into their data streams? Robustness testing, don't ya know. Since there's no way to guarantee flawless links you need to stress the system to locate problems.
The likely outcome would be that the markets would continue to perform as expected while a number of HFT firms would go belly up. Who would miss them?
Front running and adding a spread ?
Ummmm, aside from it sounds like something different, not much.
scientists got it all wrong.
Sensitive information should not made public until certain hour of certain day happens to be transmitted faster than speed of light. But as we all know people working in finance is extremely honest, so it must be a flaw on modern physics theories.
Of course.
What possible value can HFT be to the market? (I know about the liquidity claims, its BS) The trades last microseconds, the entire premise of the stock market is that investors provide money to a business for a time, the business uses that money to expand their operations, hire workers, etc. That doesn't happen in less than a second. HFTs are simply a tax on the market that is put in place by those with the money to purchase the equipment and pay off the regulators for faster network connections (among other things).
bragged that the ship was unsinkable and look how well that turned out. Of course the CEO is going to say that but that doesn't mean much.
Rigged implies pricing is completely controlled by these HFTs which is not true. It is a skimming
basically these hfts are making pennies per trade but doing so in billions of trades.
In further news, the Nevada Gaming Commission claims that the games at the Vegas Casinos are not rigged in the house's favor.
Film at 11.
As I recall, before computerized trading it was done by human brokers who took a bigger cut than the computerized trades do today. I don't claim to understand either way, but for my occasional trades it doesn't seem any worse, maybe better than the old way.
are trading houses spending hundreds of millions of dollars on high speed, fiber optic, trunk lines, in an effort to cut milliseconds from their transaction times? Give me a break puddin cake!
The USA is only 4X older than me...perspective
When put this way, the only events that qualify are explosions and lightning. Even an earthquake takes seconds to minutes to "change value". Tornadoes take minutes and hurricanes take hours or days.
HFT is totally removed from real world phenomena. It is a completely fictional construct. Is it any surprise that it is used to fleece the suckers? It has no legitimate purpose because it is not a real world measure of anything.
Why is Snark Required?
Casino Owner on Casinos : The games aren't rigged.
'The U.S. markets are the strongest and most reliable in the world.'
Reliable in that insiders can reliably make money?
That's a red herring. The strength of the market is not necessarily related to its fairness.
and lobbies are not involved bribery. Nothing to see here. Everyone is playing fair.
U.S. Securities and Exchange Commission Chair Mary Jo White told a U.S. House of Representatives panel that she flatly rejected claims that retail investors are being fleeced by high-frequency traders
I'd make a bet with anyone that someone is going to be "shocked and surprised" one day that there was rigging going on just like Allan Greenspan. And just like Allan Greenspan, a certain SEC Chair is going to be miraculously a very wealthy bitch when she retires from a government oversight job.
Of course, I feel compelled to let you know that the betting process is rigged in my favor.
>>"ad space available -- low rates!!!"
They are guaranteed jobs in HFT firms after they retire from SEC:
"High-frequency trader Getco hires key SEC staffer"
http://www.reuters.com/article...
Who the hell is he kidding?
Seriously, even if we know that the lie detector can be beaten, hook her up to it, then ask for a lie to calibrate, then turn on the taser. Any time she lies, she gets hit with pulsing 50Kv.
Then ask the serious questions. The fear of being shocked will break the conditioning and the lies will be detected. Hilarity will ensue.
You know what, a savvy PC technician that has access to the switch, could offer to move somebody elses server plug closer to the server plug...for a price.
It would shave a few miliseconds off.
Just remember, I came up with it so you pay me 50% of whatever you get out of the deal.
If HFT doesn't yield an advantage, why invest the not inconsiderable time and effort in this infrastructure?
This defies the logic of Wall Street itself not to mention common sense.
... why on Earth don't they just ban it?
The whole concept of 'insider trading' is that you're using knowledge that wasn't yet available to others.
If someone told you, 'hey, we're going to sell in 5 minutes at $100/share', and you went and bought it all up so they had to buy it at a slightly higher price ... wouldn't that be trading on information before it became public knowledge?
Now, it might not be 'insider', as you're not within the company whose stock is being sold ... and they're legally allowed to release the information ... but there are so many other laws regarding stock sales (eg, 'tender offers', where a company plans to buy back shares at a higher price, and they have to leave it open for a given amount of time), that I'd be willing to argue that it *should* be illegal, even if only to improve 'investor confidence'.
(ie, why would you trade in the stock market when you're getting scammed every time you do?)
Build it, and they will come^Hplain.
If the SEC simply required all exchanges to have a minimum time slice of 1 second this would not be a problem.
Load up the current bids and asks, and only "solve" the match up once a second. Problem solved. The entire scheme of HFT would dissolve.
So Wolves eat dogs?
I don't buy stocks anymore because I KNOW THEY'RE RIGGED.
By law, all shares purchased shall be held at least five years before they can be re-sold.
You want a longer term view on the economy?
A 10% tax on selling stocks held less than a month (or whatever numbers you think appropriate) would quickly put a stop to all sorts of shenanigans, while not harming, and in fact benefiting real investors. After all, the whole point of stocks is to allow investors to invest in a company, not some sort of gambling scheme.
Don't waste your vote! Vote for whoever you want, unless you live in a swing state it won't matter anyways
There seem to be a lot of sentiment and myths in these comments, without many facts. Brokers, HFT firms and banks would not accept if the markets were rigged or unfair. In fact, there are hardly any exchanges left that provide an unfair advantage. (and none of them are in the USA) Customers get the same length of fiber, whether they are in the cabinet closest to the matching engines or the furthest away. If companies opt for a low cost solution (non-colo, 100 mb line or lower) then it is truly their choice. Without discrimination, the US markets offer the best solution to all. Just have a strategy ready that pays for it, and pay for it. If you, as a customer, always pay a price close to your limit instead of close to your minimum for a product, then you most likely have chosen the wrong broker or bank to execute your orders.
No one is complaining about computerized trading (well except for the brokers), the problem with HFT is that people who have enough money & influence with the exchange can get themselves a fast enough connection to get between a valid trader and a valid business and skim some of the money off the top of the transaction between the two. It may only be a few cents or bucks per transaction but they do it hundreds of times a second so it adds up. It provides nothing of value to the market but makes some billions of dollars at the expense of others.
I used to work as a trader for a major wall street firm. Slight correction in the terminology. If you are bidding the stock you are a buyer, If you are offering the stock you are a seller, regardless if the price you want to buy/sell at is on the bid or ask. If the bid/ask is $1.00/$1.01 and you offer $1.01, you are offering to sell at $1.01, and become part of the offered volume at $1.01. I know, I know, I sound like a bit of a prick pointing out the nuances. But you'd be in for a world of trouble in a pit or on a phone order offering a ton of stock if you were a buyer.
There is no mechanism provided by any exchange which would allow any market maker to observe orders entering the exchange and then enter an order ahead of them.
Doesn't have to be provided by the exchange. What they do is place small (100 share) on lots of stocks and when someone buys a small amount, the HFT algorithms can interpret intent to buy and buy up that stock ahead of the rest of the order. Some exchanges even pay firms to make markets which is nuts until you realize what they really are doing. Additionally a lot of orders are not filled on open exchanges but in dark pools. Stock exchanges permit HFT firms to co-locate in the exchanges. There is NO plausible reason to do that unless some form of front running is occurring. There is NO reason for HFT firms to lay their own fiber or microwave connections unless it provides them some huge informational advantage.
Seriously, read Flash Boys. It's an interesting read and worth your time. Even if it gets parts of the story wrong, there is enough credible evidence in there which can be backed up to paint a pretty damning picture of how you are getting screwed. Maybe not big time screwed but definitely screwed.
Thinking anyone believes her.... Sure, hun. Santa Clause is coming. The Easter Bunny is real. There's going to be oil *forever, and the markets aren't rigged.
Please do not read this sig. Thank you.
Then again when the regulators have been gutted,bought off, and have former (and soon to be again) Wall Street insiders running them, what do you expect?
The industry is practically self regulated now, an oxymoron of course, which is to say: they aren't regulated.
Free markets will solve all -- except of course when our extreme greed causes the excrement to hit the fan and then it is time for the taxpayer to pony up. Bonuses!
I'm sure she thinks that America has the best health care delivery system in the world, too.
Well, apparently, you only have to fool the majority of people for a little while.
If the investment houses that do HFT didn't get an advantage by doing it then they wouldn't do it.
They clearly do it so they're getting an advantage.
Is this not plainly obvious to even a child?
I've decided to stop wasting my time responding to AC trolls/sockpuppets... so if you want a response from me... login.
I shouldn't touch this. It's off topic flamebait by an Anonymous Coward. I KNOW I shouldn't touch this.
The Benghazi "scandal" is either 1. A fuck up. They didn't do security right, and people died. Then they quibbled about it when asked. This is probably the actual scenario and I'm not too worried about it. The fact of life is that you can't be prepared all the time, everywhere. Terrorism works because you can't see it coming. That's kind of the point. Start TSA'ing all the planes, they'll use busses next time. Start TSA'ing busses and they'll use something else. So, it's an understandable fuck up.
Or 2. It's a secret plot by Hillary Clinton to do.... What? Ruin her own presidential chances?
The TLAs can't keep us safe all the time. Shit is GOING to happen. I could bring this country to it's knees with $500 in cash and a home depot, and they'd never catch me. So shut up already.
The problem is a lack of regulation. That we allow entities that aren't allowed to vote to donate political capital is a crime against representative government. Until we outlaw private campaign contributions nothing will change. Sure, it may be freedom of speech, but so is yelling "fire" in a crowded theater. There are cases where the good of society overrides the individual's freedom.
Yeah Right, so not if not rigged still an advantage to the big $$$ players.
So to ironically use a couple of old adages:
"The checks in the mail"
"I'll respect you in the morning"
Saying that HFT isn't cheating is like saying that all the cars on all the highways are always obeying the speed limit -- it isn't even close to true.
We are aware of border types like market and limit -- HFT's use hundreds of different order types provided by exchanges to gain information that can be used to trade against people. This impact the stability of exchanges -- which is a more stable code base, one with 3 order types or 100 ?
If even a 10th of what is described by Michael Lewis in Flash Boys is true we should all be disgusted with wall street, the SEC, and our financial system.
At this point the only purported solution to this problem is to trade on IEX -- an exchange designed to be fair.
The big problem with the HFT scam is that it is difficult for people to understand because it is complicated and opaque. Unless you actually spend the time to understand the system it is very hard to have a valid opinion. There are no magic analogies that come close to describing what is going on.
Suggest reading Flash Boys if you are at all interested in this topic -- it was like candy for me to read.
If it is possible to create such a device it should be put into mass production, anyone wishing to address congress (public, regulator, lobbyist, representative, senator, president, etc) in any way should be required to put one on before they utter a single word.
Can't the SEC grow a pair and actually say definitively whether people are being front run or not?
The SEC isn't as all powerful as they seem. They are pretty limited in budget and resources. That is not an accident. Guess who controls SEC funding? Congress.
The money your own plan charges you in fees is way more than these supposed 'losses'. You would do yourself better by complaining vocally about those fees.
When liquidity dries up, you can be paying tens of cents on the bid/ask spread.
Foxes, and they want a rather large order of Mcnuggets.
Got Geometrodynamics? Awe, too hard to figure out? Too bad.
These people do not obey laws.
They do not care about the constitution because they control and print the money.
We are way way WAAAAAAAAAAAAAAAY beyond the point of fixing this through the ballot box, and if anything thinks so, you, your wife, kids dog cat and canary are going to end up dead.
Got Geometrodynamics? Awe, too hard to figure out? Too bad.
I'm not sure the 100% idea would ever happen, but I know the notion of varying capital gains taxes based on the duration they have been held has been discussed a lot as means to discourage risky, short-term bet-making, market churn and encourage investment.
Several problems with that solution. 1) It is a bookkeeping nightmare. Even if you could keep super accurate records in a useable and transparent form (nobody does) it would be impossible as a practical matter to check them. 2) Taxation is a post-hoc solution and it's not remotely difficult for a large firm to dodge taxes. 3) It does nothing to eliminate or mitigate the information asymmetry problem which is at the core of the issue. 4) It's not remotely clear that it would actually cause the behavior to cease - at best it might shift the problem elsewhere.
Can't the "HFT" bullshit liquidity computer just do this shit without an elderly white male skimming the profit of the transactions? This shit should be non-profit or run by the state.
High frequency trading may not be rigging the market.
If they ask about low latency trading, she may have to give a different answer.
How on earth does a *smart* investment rely on microsecond-span fluctuations in stock prices? It can't. Either something is or isn't a good investment. If you need a Mathematics PhD churning out time-sensitive algorithms to make money, by nature that means you're gaming the market.
I swear to God...I swear to God! That is NOT how you treat your human!
No one on Wall St, except for the willingly deluded, believes that the markets are not rigged. Ever strategy takes into the account how the market is rigged and works to deal with it. You're either a whale (those that rigged the market) or remora (those work to siphon some value from the whales).
I'm half way through "Flash Boys" (well written, entertaining). It is interesting the impact that technology has had on the stock market, but this isn't anything new (which is one of the points of "Flash Boys").
one for putting things in perspective: "Where are the Customers’ Yachts?" by Fred Schwed, Jr. (first edition 1940).
and under "they are trying to change the world": IEX Group
It ain't what they call you. It's what you answer to. http://mylyceum.us/
Her testimony reeks of the Onion. Consider who she works for: it's certainly not the small investors, and it's not any government representing them (which no longer exists in the US anyway.)
BTW, does anyone know where SEC fines go? As in, they bust a big bank for some gross violation or other and "fine" them $1 billion on their ill-gotten $5 billion. Does the fine in any way benefit the victims of the scam, or is it just protection money in exchange for no real penalty? I seem to recall an executive getting a big bonus for running an "illegal" scheme, because his bank still turned a big profit after the fine.
If it's not a problem, then she shouldn't mind the proposed fixes, since they should have no appreciable effect. But the fact she is making a deal of it is a sign there is something going on to be cncerned about.
Wolf in sheep dog's clothing rejects claim that flock in danger from canine predators.
Only steal in large amounts. Six digits at the minimum.
Stealing fifty bucks will make you prison bitch. You gotta steal millions if you wanna just play a fractional-of-this fine.
"... the retail investor is very well-served by the current market structure." Yes, but: "To Serve the Retail Investor" q="to+serve+man"+cookbook" It's a cookbook.
If they were providing some kind of service between the trader & the business I'd agree, but from what I understand they provide absolutely nothing to the transaction. The situation you describe is like a shipping company transporting a product from a manufacturer to a retail store and would be a completely reasonable value added transaction. The analogy of HTF though is probably closer to a company who hears that there is a lot freight traffic going between a business and a retailer so they build some rigs into the pavement along likely travel routes to siphon a little fuel out of the trucks that they sell off for a profit.
Imagine someone putting a toll booth on your residential road. That's what effectively happening.
Where are you anti-tax wing nuts? This is a tax in all but name.
Make sure everyone's vote counts: Verified Voting
You can almost see the dollar signs in her eyes.
Make sure everyone's vote counts: Verified Voting
Better to remain silent and be thought a corrupt fool in dire need of replacement than to speak and remove all doubt.
When people successfully create their your own exchange and sell consulting services to help investors avoid the HFT tax it is no longer in the realm of being a question. You are arguing against objective reality at that point.
Exchanges give special technical access to HFT's to do the deeds---because HFT's kick them back money.
You see, a perfectly "free" lassiez-faire market, where bribing the referees is called business.
As usual, tales of rigged markets and front running are equated with HFT, and modded up +5 by people who need to step back and take a deep breath. Please ponder the following points and think again.
1 Front running is what we call it when a market participant gets a peek at orders before they go to market. You could send your orders in on a post-it note on the back of a snail, and if that participant sees and acts on them before they go to market, that's still front running.
2 Flash trading is what we call it when an order is shown to a market participant for a brief moment of time before they go to market. Sounds like front running, right? Except that (at least for DirectEdge customers) you can flag your order to not be subject to flash trading. Why would anyone voluntarily subject their order to flash trading? Who knows - maybe they get a break in commission - the point is they can turn it off.
3 Rigging the market may also include self trading in an attempt to boost apparent volume at a price, or quoting prices you don't intend to be filled on to goose the market. Both of these practices are already illegal and well policed by the exchanges and the SEC.
4 The "liquidity" that everyone pooh-poohs is part of what makes things cost what they do. Introduce more bid-ask spread in the commodities markets, and the costs will go up for pretty much everything: bread, milk, gasoline, etc. HFT helps liquidity because it reduces the time for cheaper prices to percolate around the market.
5 HFT is there because the markets are largely FIFO, and the markets are FIFO because FIFO is unbiased. Can you think of a more unbiased match algo? Lots of people put forward some sort of time bucketed system, but it doesn't solve the problem of who gets filled when there are more buys than sells in a bucket or vice versa. Nor does it solve the problem of cross exchange trading where time buckets are not likely to be synced, and people deal with it by increasing the bid/ask spread they're willing to quote. (See #4.)
Sometimes, it really is more complex than "She's bought and paid for by HFT". Plus, if you can't bring yourself to take off the tinfoil hat, you might consider that opponents of HFT (like big banks) are precisely the ones who benefit if HFT goes away. Now back to your regularly scheduled screedy goodness.
And your 401k is managed by people so naive as to allow that? They don't themselves adopt similar technologies and strategies to mitigate that?
The people who manage your 401K are not paid for performance. They do not give a shit if you make or lose money. They get paid either way. Furthermore what makes you think they aren't in on the fleecing? It might not be the folks managing the 401K but it may very well be some other arm of the company managing your 401K.
Frankly there is nowhere to run.
Why not use SSL to communicate all orders (which are made in secret) to all markets, and then have all the market/limit/stop orders settle once every second, on the second? (Essentially, some people would say buy or sell at whatever market price, some say buy or sell with a limit or trigger price, and the market price is defined as the price that moves the most stock subject to the buy and sell requests.) That would level the playing field without impacting a human's ability to buy and sell stocks significantly. Everyone in the world could enjoy the same effective front seat at the markets, so long as their ping times are under 900 ms.
HFT's get the heck out of the market in a plunge.
You may have been filled by a statistical arbitrage trading system, which is fine.
While HFT needs to be controlled, or at least watched, I strongly suspect that it does less damange to individual investors' portfolios than a general lack of knowledge about accounting, tax, and business. HFT is an important issue, but if you don't know how to understand a 10-Q, then HFT is probably not your largest problem.
Just sayin'....
If the brokers weren't fleecing the retail traders why would they be paying extra for the HF Trading abilty?
... while standing at the door of the hen house.
Upton Sinclair - "It is difficult to get a man to understand something when his salary depends upon his not understanding it."
Regulatory Capture https://en.wikipedia.org/wiki/Regulatory_capture
Until they offer a 10x opus that explains why Flash Boys is a lie... what they say are just lies. I trade, I've seen the results first hand, that is my experience. What I want is a system that has been proven fair by game theorists. Front running orders based upon speed, is exactly one of the more mundane things they do. There are other things that are even less ethical.
You put in offer to sell, market is as 100. You sell 100 shares. The come in fast, first, and say, will you sell for 100, you say yes, they cancel the order, they say, will you sell for 90, you say yes, they cancel the order, and the drive if down the the exact figure of your limit, and then trade at that, and they do this in milliseconds, providing liquidity. Next result, they broke the entire trading model, solely due to speed. The closest hft to your order does this to every order. What I want is the order to post for 20 seconds, and to allow anyone that wants to beat the hft trader to then come in and take it form me at a better price than his, since he was just going to turn around and sell the shares he bought at 80, in the next 3 ms to that person anyway, but, he would sell for near around 100. 20% profit on total volume explains why we have fht.
I can prove this, any time, to anyone, get 100 shares of Google, sell with a limit order 99% of market, and sell with no lower limit. Do this 100 times, or until you see the truth of my assertion. You will then know the game is rigged. We never had that with human traders, because the brain would kick in and that person would be invited out of the room. Now, all the big firms are paid to pass orders to the folks that fleece the traders. Again, if you think that is not rigged, then you are being paid by fht or you are one, or you are ignorant.
Shouldn't point-to-point encryption between the buyer (Alice) and the seller (Bob) exclude any interlopers (Eve)? Public purchases could then be announced after the fact.
. . . no human would! No wonder she did such a piss poor job on Enron (she lead the DOJ's legal team), when all those offshore debt vehicles they used to hide the debt (similar to how Fastow did it at Continental of Illinois, which was the largest bank failure prior to Enron) should have been easily and legally damning enough, for chrissakes!
Although HFT is front running, even worse to the retail investor is the business of internalization, whereby the major brokerages sell 100% of their retail stock trades, on an almost daily basis, to the top banks and hedge funds (and the largest hedge funds are normally owned by the largest banks) --- where the banks and hedge fund match up those trades internally on their computer systems (know as dark pools) which gives them almost complete command and control in insider information on a swarm basis, and manipulating things to their own profit by how and when they do those matches (matching buyer stocks to seller stocks, etc.).
Of course, with the existing potential to purchase an unlimited number of commodity futures per category or item, gives the traders and houses extraordinary ability to manipulate things.
Then there's that LIBOR rate rigging: (Madam Brown explains it far better than moi!):
http://www.counterpunch.org/20...
Of course, being able to purchase an unlimited amount of naked swaps (or uncovered credit default swaps) is what precipitated the global economic meltdown (and NO, the subprime market was but a drop in the bucket where securitizations of debt were concerned, and even then 5/6ths of the subprimes were corporate or wealthy individuals).
Of course, then there's the FOREX market rigging, precious metals markets rigging, virtual naked stock short selling thanks to the DTCC's Stock Borrow Program, and . . . .
You obviously neither understand FPGA programming, HFT, dark pools and the Internalization Business, nor the many, many other ways they do what they do. You follow that bank lobbyist, Paul Krugman, right?
Clue in, sonny. . .
http://www.counterpunch.org/20...
. . . which President John F. Kennedy even mentioned the possibility of rising, along with other circumventions on foreign banking, and offshoring monies to avoid taxation - - - and then President Kennedy was murdered.
you have also correctly and succinctly described the present Fantasy-based Finance Sytem in Amerika today!
. . .their Intenalization Business, which is the epitome of insider trading.
This says as much about why economic crimes continue in the US unabated and how the SEC is a paper tiger with no ability to do its job!
Look at her background - BA/MA in psychology, not even economics or finance. She doesn't know what she's talking about technically and her flippant and delusional claim only cements this fact.
A friend of mine has been actively managing his own stick portfolio for twenty years. He's invested thousands in software over the years he uses to execute trades. After years of "playing the market" he told me a couple years ago that he thought the market "was rigged somehow". It seemed to him that many times he found a good prospective investment, someone else always beat him to it and prices would increase before he had a chance to make his trades. Something seemed fishy to him. Well ... now I know his instincts were on the ball (and so does he). Doesn't surprise me though. That's the way capitalism works - find some way to fuck the other guy and make more for yourself. The markets are completely amoral. There is no moral basis to capitalism.
"Those who can make you believe absurdities can make you commit atrocities." - Voltaire
Wouldn't this abuse be easily fixed by instituting a random variable latency into every trade, assuming that unfair advantage is speed and speculation, Either that or hack the connections of HFT houses so their communications are delayed, in a random way. There are ways to disrupt their business model.