Subscribe: RSS Feed | Twitter | Facebook | Email
Home | Contact Us

WSJ: HFT’s Real Villains Are Financial Regulators

Posted by Larry Doyle on April 3, 2014 10:38 AM |

In what might read as a prologue for my book, none other than the Wall Street Journal writes today that the real villains in the ongoing high frequency trading debate are our financial regulators.

Truer words were never spoken.

While America is fed a steady diet of technical terms on latency, co-location, and the like, let’s redirect the focus to where it really belongs, that is a financial regulatory system that has served to promote and protect Wall Street rather than upholding its mandate to protect investors.  The evidence is overwhelming and there is very real corruption that has transpired in the process.

As the WSJ concludes:

. . .  if New York Attorney General Eric Schneiderman and others looking for headlines want to string up high-speed traders, honesty requires them to put the regulators at the front of the rope line.

Now that’s what I’m talking about.

Let’s start with an independent investigation with the power to subpoena. Then get Chris Cox and Mary Schapiro in here.

Larry Doyle

Please order a hard copy or Kindle version of my book, In Bed with Wall Street: The Conspiracy Crippling Our Global Economy.

For those reading this via a syndicated outlet or receiving it via e-mail or another delivery, please visit the blog to comment on this piece of ‘sense on cents.’

Please subscribe to all my work via e-mail.

The opinions expressed are my own. I am a proponent of real transparency within our markets so that investor confidence and investor protection can be achieved.

  • Peter Scannell

    And to think the hero comes from the industry itself – electing
    to be part of the solution rather taking advantage of the problem.

    The solution, a 38 mile long coiled fiber-optic line levels the playing field against the 10s of billions of dollars invested by HFTs skimming the saving of mom and pop. How sweet is that?

    http://video.cnbc.com/gallery/?video=3000263972

    “CNBC’s Jim Cramer explains why he is paying attention to
    Charles Schwab’s comments that high-frequency trading is a “cancer.” I’m keeping an eye on the high level of cancellation orders, says Cramer.”

    http://finance.yahoo.com/news/watch-fight-stopped-trading-nyse-173840783.html

    Watch BATS Global Markets president William O’Brien go batty
    defending his “niche.”

  • Peter Scannell

    From 2000-2008 our markets evolved in to a cesspool, Wall
    Street paid handsomely for all the regulations they did want!

    From 2009 – present, our federal securities law enforcement
    agencies have been sticking every finger available in the profusely leaking Wall Street dam.

    From 2009 – present, every single year our Congressional
    House Appropriation Committee has withheld the needed funding from our federal securities regulators to examine and eliminate the entrenched excrement of Wall Street despite the efforts NOT COSTING TAXPAYERS A DIME, returning BILLIONS OF DOLLARS back to VICTOMS of fraudulent financial schemes – all the while being DEFICT NUETRAL!

    And as you have pointed out before LD, most of Wall Street is
    not villainous.

    And not all those elected to serve in D.C. are villain enablers!

    And as I have said before LD, since the financial crisis
    burst onto the seen in 2008 it’s supposed to be all hands on deck in D.C., but for some, they’re holding their dicks tighter than ever.

  • Peter Scannell

    http://finance.yahoo.com/blogs/breakout/5-steps-for-cleaning-up-high-frequency-trading-202813527.html

    1. Stop releasing material information
    ahead of time. Embargoed, sold or otherwise released. Let everyone hear the news at once.

    2. Penalize front-running. This is a
    little fuzzy. Positioning yourself to gain from financial moves is the essenceof trading. Regardless if the government is going to go 80-0 on insidertrading cases without having a firm definition in place
    penalizing an algo that front runs a 500,000 block of Intel (INTC) shouldn’t be too hard.

    3. Stop cutting up spreads and
    commissions. Dr. J says the lower limit should be one penny. Think of it as anatural throttle and regulator on speed trading.

    4. Transparency. All bids, asks and fills
    available for everyone to see.

    5. Bring back market-makers to provide
    liquidity as a last resort. Pay them for filling the role. It’s an idea of puregenius in its retro spirit.

  • Where to begin! The corruption within the financial system is almost unimaginable to unwind. I had thought the suit alleging price fixing by the NASD and market makers back in the late nineties would have been enough. What did the NASD have to pay? 1 billion as I remember it. We then saw a host of new regulations that simply entrenched existing players and crowded out new or smaller firms with the cost of compliance (aside from selective enforcement).

    FINRA is permitted to act with impunity, operating under the guise of a Quasi government agency but also as a for profit entity disguised as a non-profit private corporation. Almost as powerful as the IRS.

    The explosion of digital currency, or simply the ability to transfer value without middleman intervention can be applied to securities. I am sure there are people thinking on this as I have. The current model is failing and like the entertainment industry, participants use law and regulation in order to perpetuate a failed model.

    I am unsure of the fix. I am in possession of a software enterprise that functions as an exchange engine. I have tried to design a non profit exchange model for a few years now. The problem is always greed. Every investor I have spoken with inevitably says, “but we can make more if”.. Its complicated of course, But I can’t help but think a non-profit with full transparency would address any SEC concerns and provide a true free market system.






Recent Posts


ECONOMIC ALL-STARS


Archives