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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: 1) by cyxs on Wednesday April 30 2014, @05:23PM
They don't place the other order they sell the market data to another party that is right next to them server wise so nearly no delay. That other party then places their own order via the market and if they have a quicker backend to get to the market then the broker its not violating any laws because the broker isn't trading your or another orders differently they are selling the market data.
(Score: 1) by infodragon on Wednesday April 30 2014, @05:29PM
I've asked again and again but nobody will provide concrete examples of this being done. When making a statement such as this in which an industry, company, group or individual is demonized it should be backed up with examples/fact.
I.E. completely unlawful behavior of Enron, manipulation of credit ratings by the industry that helped propagate the MBS fisaco, Goldman Sachs/Bank of America/... selling MBS garbage rated AAA. There is corruption in the industry for sure, with concrete examples. So far none have been provided to demonstrate YOUR order being front run by HFT.
Don't settle for shampoo, demand real poo!
(Score: 1) by cyxs on Wednesday April 30 2014, @05:53PM
This could be shown to be true if you had lots of money and time. I recently read about the IEX where they delay the market orders 300ms or something like that and alot of investors are happy with that because it delays or makes HFT harder.
Also another thing that your saying is if order is placed on an exchange that HFT can't jump in front of it. Yes this is true but a standard person can't place orders directly on exchanges. They have to place an order via a broker. That is where dark pools and HFT come into play. A broker sells the market flow data which is all the orders they are processing to 3rd parties and those are the ones that use HFT to jack up the price.
(Score: 1) by infodragon on Wednesday April 30 2014, @05:56PM
A broker has a fiduciary responsibility to get you the best price possible. If they do not do this either by matching against their dark pool or sending your order down one pipe and their order down another they have failed in that responsibility and is illegal.
Don't settle for shampoo, demand real poo!