Wednesday, October 14, 2009

SEC Dragging Its Feet But To Eventually To Look At High Frequency Trading After Banning Legalized Theft Of Flash Trading

Link here.

Of course, one of the "experts" cited in the article thinks high frequency trading is just right. You know, like the porridge in Goldilocks and the Three Bears. So how many of you have access to the floor of the New York Stock Exchange where you are able to plunk down a computer capable of high frequency trading? Of course it's just right. Explain it to an average American and I'm sure all of them would know intuitively in their gut it was perfectly fair.

I wonder how many people have given thought to a particular dynamic driving all of this? The NYSE used to be a not-for-profit corporation. Then guess what? John Thain, yes that John Thain who used millions of shareholder dollars to remodel his Merrill Lynch office with extravagance reminiscent of the gilded age, became boss man of the NYSE when he left, you guessed it, Goldman Sachs. Mr. John, as we'll call him since he spent what? $35,000 on a commode for his office, then proceeded to make the NYSE a for-profit public corporation. Now with the insatiable desire for profits, the NYSE would be open to manipulation by large financial firms. Just like the manipulation of Congress in their desire for profits. So, I wonder who initiated these discussions of high frequency trading and flash trading? Possibly firms such as Goldman Sachs?

How much foresight might have been given to this type of effort? Was the NYSE targeted to be made a for-profit corporation by Wall Street firms because they could then use asymmetric access to information to heist money from other investors and society? It is this very dynamic that has allowed them to purchase nearly guaranteed outcomes via lobbying our government to the tune of billions of dollars. Unfortunately since government is blocking any investigation into these crises, we can only guess. But it's a plausible guess.

Interestingly, a newer article has come out since I tagged the first one for post. 36% of attendees to a Frankenstein finance event believe high frequency trading could present a risk to the stability of financial markets. The other 64% were asleep at their desks. And 70% of attendees believe the SEC is also sleeping at their desk in reference to high frequency trading. The other 30% are minting profits courtesy of the SEC's sleeping habits or are busy assisting Congress to ensure the SEC remains asleep at their desk.
posted by TimingLogic at 2:38 PM