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Under the headline, "The Wolf Hunters of Wall Street", The New York Times Magazine is running this review of a new book. It tells a long story that ends in the creation of IEX (Investors Exchange), a new stock exchange with the intent of bypassing the unfair advantages that co-located high-speed traders currently have. After a few weeks of operation near the end of 2013, their volume was larger than AMEX(!!)
Here's a quote from near the end of the book review:
IEX had made its point: That to function properly, a financial market didn't need to be rigged in someone's favor. It didn't need payment for order flow and co-location and all sorts of unfair advantages possessed by a small handful of traders. All it needed was for investors to take responsibility for understanding it, and then to seize its controls.
"The backbone of the market," Brad Katsuyama (President & Chief Executive Officer, IEX) says, "is investors coming together to trade." While the article is long, I enjoyed the story. I have no connection to this company, but here's their website.
(Score: 1) by khallow on Wednesday April 02 2014, @09:59PM
Most of the value I am seeing is mainly from an academic viewpoint, and provides no practical benefit whatsoever.
To you. It's not all about you.
You're saying that enough value is generated that it is OK to constantly nickle-and-dime everybody's retirement plans to give a few already-rich traders additional incentive to participate, because HFT is naturally at odds with the profit of average, low-volume traders.
Here's an example. Low volume traders are almost invisible to HFT. A few nickels and dimes over years are nothing especially considering the reduction in bid spread as a result of HFT and similar trading. As to your retirement plans, look at who has your money. That entity is far more capable of taking your money than the HFT traders are.
I don't see any other way for corporations to become worthy of the "personhood" they have been granted.
So your financial ignorance stretches to the realm of corporate personhood? Bad ideas accumulate, I guess. Corporate personhood is another area which I think works well as is.
The problem here is that people with lots of wealth had advantages. It's not corporations or HFT that give them this power, but wealth. My take is that even if laws are passed which shut down corporations and HFT, it will be done in a way that furthers the power of people with wealth (especially given that I don't think corporations or HFT actually does that much for wealthy people).
(Score: 2) by etherscythe on Wednesday April 02 2014, @11:21PM
Feel free to enlighten me. No, seriously, I don't have a burning need to be "right"; if you have credible sources I will give credit where it's due.
From where I sit, HFT algo wars lead to things like market bubbles, which are unhealthy and lead to collapses that destroy retirement plans and such (to say nothing of bugs causing flash crashes and the cascading effects therefrom). I've seen markets collapse and investments go down in flames. I have yet to see a HFT algo used to cure cancer, or really any positive benefit at all for anyone who doesn't have the money to drop for high-end hardware and connections. Maybe it's there, but it's certainly not to be found in your reply. Show me and I'll change my tune.
But then, if you're not seeing how corporate campaign donations and lobbying that result from that personhood are skewing the political landscape with disproportionate effects for those who are not in the 1%, we probably have irreconcilable differences of perspective, at which point there is nothing more to discuss. Given your tone, I wouldn't be surprised.
"Fake News: anything reported outside of my own personally chosen echo chamber"
(Score: 1) by khallow on Thursday April 03 2014, @02:37AM
HFT algo wars lead to things like market bubbles and lead to collapses that destroy retirement plans and such (to say nothing of bugs causing flash crashes and the cascading effects therefrom).
Why would it? You need incorrect valuation for a bubble to occur and it can be worsened by easy credit from some sort like central banks or high levels of leverage. That has nothing to do with speed of trade.
I have yet to see a HFT algo used to cure cancer, or really any positive benefit at all for anyone who doesn't have the money to drop for high-end hardware and connections.
Pension funds don't do that either.
But then, if you're not seeing how corporate campaign donations and lobbying that result from that personhood are skewing the political landscape with disproportionate effects for those who are not in the 1%, we probably have irreconcilable differences of perspective, at which point there is nothing more to discuss.
I guess it's time to move on then.