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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, Interesting) by SplawnDarts on Wednesday April 30 2014, @04:18PM
For anyone who remembers the bad old days pre-digital exchanges, pre-decimalization, and pre-HFT, the retail investors had it MUCH worse. It was not uncommon to cross a $1/8 gap between getting into and out of a position - on stocks that might cost say $20. And then there were commissions on top. So you were paying the "man" maybe $0.15 per round trip or something. That number today is frequently more like $0.03 if you choose an appropriate broker and depending on how liquid the stock is.
HFT may leave a bad taste in your mouth, but the cold hard facts say the modern ecosystem is FAR better for retail.
(Score: 1, Interesting) by Anonymous Coward on Wednesday April 30 2014, @05:25PM
Hell, I remember when retail brokers had a book of commission costs so they could look up what to charge you. The information was "secret" and you wouldn't know your commission on a trade until you placed it. Commissions might cost eighty or a hundred dollars on a 200 share order. In recent years I've paid as little as $8.95 on a 10,000 share block.