New York Stock Exchange Settles Case Over Early Data Access. Sep 14, 2012. The New York Times by Ben Protess http://dealbook.nytimes.com/2012/09/14/n-y-s-e-settles-regulatory-action-on-trading-data/?nl=todaysheadlines&emc=edit_th_20120915
[Excerpted] In the latest
federal action against a major exchange, the New York Stock Exchange settled
accusations on Friday that its trading data gave select clients a split-second
advantage over retail investors.
The Securities
and Exchange Commission issued a civil enforcement action citing
the Big Board for "compliance failures" that allowed
certain customers to receive stock data before the broader public. The improper
actions, which began in 2008, ran afoul of safeguards set up to promote
fairness in a system known for favoring elite investors....
Majia here: Customers who receive stock data before the broader public are able to "scalp" markets by buying and selling before other, slower investors. Inequality in access to information means the market is not free.
Furthermore, market players with super fast computers can also push out buy and sell orders and then pull those back in micro-seconds, triggering slower investors' buy and sell programs.
This is called "quote stuffing" and it is essentially a kind of fraud because there never is any intention to execute the transaction.
The market is essentially rigged and the big powerful players are in every sense of the word "market makers."
RELATED POSTS
High Frequency Trading Arms Race Mocks "Free" Markets http://majiasblog.blogspot.com/2012/04/high-frequency-trading-arms-race-mocks.html
Financial Warfare
Using High Frequency Trading, Quote Stuffing and Naked Short Selling http://majiasblog.blogspot.com/2011/08/financial-warfare-using-high-frequency.html
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