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posted by LaminatorX on Wednesday April 30 2014, @01:04PM   Printer-friendly
from the The-House-Always-Wins dept.

US Securities and Exchange Commission Chair Mary Jo White told a US House of Representatives panel that she flatly rejected claims that retail investors are being fleeced by high-frequency traders who can use their speed to jump ahead with buy and sell orders that fetch better prices. "The markets are not rigged," says White. "The U.S. markets are the strongest and most reliable in the world." White's comments to the House Financial Services Committee mark the first time she has directly responded to allegations in Michael Lewis' new book "Flash Boys: A Wall Street Revolt" that high-speed traders are engaged in a form of front-running, in which the firms are able to quickly identify an investor's desire to buy a stock, rush to buy it first and then sell it back at a higher price. The SEC has been reviewing equity market structure issues, particularly following the May 6, 2010 flash crash incident when the Dow Jones Industrial Average sharply plunged before quickly rebounding. Although staff at SEC are considering whether to launch some pilot studies to test different regulatory proposals, there are no immediate plans to issue rules to crack down on high-speed trading or trading in unlit markets. "I want to be very clear that the market metrics suggest that the retail investor is very well-served by the current market structure."

 
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  • (Score: 0) by Anonymous Coward on Wednesday April 30 2014, @01:50PM

    by Anonymous Coward on Wednesday April 30 2014, @01:50PM (#38097)
    The term "rigged" implies to me that the game is intentionally fixed so that one particular person will win on a consistent basis. This is very different from the structure of the game being such that different participants have particular advantages and disadvantages.

    If bards always win a battle, the game is rigged. If bards, clerics, mages, and paladins all have various advantages and disadvantages in different scenarios and they each occasionally win, this is just the structure of the game. It is not rigged.

    The HFT guys do have advantages in some scenarios. So does grandma. So do the institutional money managers. So do the day traders. So do you.
  • (Score: 2) by c0lo on Wednesday April 30 2014, @02:17PM

    by c0lo (156) Subscriber Badge on Wednesday April 30 2014, @02:17PM (#38111) Journal

    So does grandma. So do the institutional money managers. So do the day traders. So do you.

    [Citation needed]

    --
    https://www.youtube.com/watch?v=aoFiw2jMy-0 https://soylentnews.org/~MichaelDavidCrawford
    • (Score: 0) by Anonymous Coward on Wednesday April 30 2014, @02:45PM

      by Anonymous Coward on Wednesday April 30 2014, @02:45PM (#38128)

      It's a bit like rock-scissors-paper.

      Grandma beats HFT because she's only selling 100 shares. There's no way to guess her order flow before it happens because of its small size.
      HFT beats institutional because huge size makes oder flow obvious.
      Institutional beats Grandma because they have the resources to do fundamental research that she doesn't.
      Etc...

      • (Score: 1) by aliks on Wednesday April 30 2014, @10:06PM

        by aliks (357) on Wednesday April 30 2014, @10:06PM (#38273)

        The HFT algos will never see Grandma's 100 share order as it will almost certainly be "crossed" in her her broker's pool rather than going to an exchange.

        --
        To err is human, to comment divine
        • (Score: 0) by Anonymous Coward on Wednesday April 30 2014, @11:01PM

          by Anonymous Coward on Wednesday April 30 2014, @11:01PM (#38289)

          Exactly. HFT doesn't hurt Grandma. She flies under everyone's radar.