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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."
(Score: 2) by VLM on Wednesday April 30 2014, @03:17PM
The problem comes from two things:
1) Confusion of are and were. Were is certainly no question, just pull the historical stats and do some analysis. Are is a little more optimistic. Has ZIRP and corruption completely broken it ... today? Well you can debate that. Everything breaks eventually, and is eventually "now"?
2) "strongest and most reliable" means nothing. You could throw measurable, comparable statistics out there. Trading volume by numerous measures. Volatility measurements. IPO volume. Liquidity measurements. By actual stats they are correct in spirit, almost accidentally. Its like calling a car or computer or OS the "best". Well, by what criteria? Possibly the guy who wrote it knew nothing about what he was talking about and was just nationalistic, or possibly knew what he was talking about but didn't author it very well. Either way he's more or less currently correct, as conventionally measured and ranked compared to other world class markets.
If someone said the USA leads the world in large mining dragline machines (those things that look like conveyor belts and cranes that are so large they're measured by acre and fractional mile), they might just be nationalist, but they're also arguably actually correct by many statistics. The Euros know a thing or two about large mining machines but ours are still by some criteria and statistics "better" than theirs. Probably because we "need" more of them than Germany does, so its no great surprise, but whatever.