If there’s one thing that definitely needs to be flushed down the toilet, it’s high frequency trading. If you’ve got any money in stocks, you’re likely losing some due to companies like Goldman Sachs using your bailout money to artificially inflate the value of stocks by using super computers to make millisecond trades. They’re watching your orders, and quickly sneaking in and inflating prices before you can buy. See this NYTimes article for more, along with this PDF from 12/08. If Sal L. Arnuk and Joseph Saluzzi knew about this at the end of 2008, why hasn’t the government put a stop to it!?!?!?!?
Fortunately Senator Charles Schumer has decided to do something about this, according to the Bloomberg article High-Frequency Trading Faces Challenge From Schumer. Better late than never… A couple of quotes:
“It’s an arms race driven by technology,” said Sang Lee, managing partner at financial-services consultant Aite Group LLC in Boston. “Someone like Chuck Schumer getting involved in the process will create a deeper conversation about where the whole market is headed”…
“This kind of unfair access seriously compromises the integrity of our markets and creates a two-tiered system, where a privileged group of insiders receives preferential treatment,” Schumer wrote. “If allowed to continue, these practices will undermine the confidence of ordinary investors, and drive them away from our capital markets.”
While high frequency trading is not yet illegal, IT SURE AS HELL IS UNETHICAL! Tatyana Shumsky is saying the same, but also questions the legality:
Forget for a moment how lucrative this can be: how is it legal? Front-running, the practice of getting ahead of other people’s orders, is illegal. Yet this is exactly what high frequency traders do – see your orders, get ahead of them, buy low and sell higher to you.
Here are a few more articles on the subject:
High Frequency Trading Programs Ripping Investors Off
High Frequency Trading Is A Scam
Controversial High-Frequency Trading Yields Billions in Profits
Flush it down!
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