And Now, Documentation (Alleged Rigging Against Investors)

The Market Ticker – And Now, Documentation (Alleged Rigging Against Investors)

If this surprises you then you need to have a brain transplant to replace the drug-addled one you’ve been attempting to “use” for the last several years.

Mr. Bodek approached the Securities and Exchange Commission last year alleging that stock exchanges, in a race for more revenue, had worked with rapid-fire trading firms to give them an unfair edge over everyday investors.

He became convinced exchanges were providing such an edge after he says he was offered one himself when he ran a high-speed trading firm—a way to place orders that can be filled ahead of others placed earlier. The key: a kind of order called “Hide Not Slide.”

Got it?

The allegation raised is that the exchanges created and offered to this guy, running a HFT shop, an order type that could be used to jump the line and get orders executed preferentially.

That’s broadly against regulatory rules that allegedly require that all participants be treated equally, incidentally, and what’s worse is that the SEC approved these order types — the exchanges didn’t do this in a vacuum, they did it with full government approval.

So the question, as usual, comes back to the porn-loving SEC folks who are more-interested in making sure that they can feather their nests in the private sector after the revolving door turns once more when their “tenure” at the SEC has expired.

This, of course, wouldn’t have anything to do with a less-than-diligent inquiry into exactly how proposed new order types interact with the rest of the trading world and whether certain people get privileged information and access that others do not…. would it?

It wouldn’t also revolve around why there has been zero investigation and enforcement aimed at firms that are pretty-clearly exploiting data feed delays between different venues and whether they might be intentionally creating the arbitrage opportunities they then exploit, right?

After all if you’re a retail trader or ordinary investor then bilking you is, as we’ve seen, perfectly ok according to the SEC provided the HFT firms “provide their liquidity” and “contribute to the orderly market” — right?

As I said in the opening line of this piece, if you’re one of those who believes this is all a coincidence I will reserve a place for you in the brain transplant line so you can have a working model installed in the space between your ears.

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2 Responses to “And Now, Documentation (Alleged Rigging Against Investors)”
  1. Ken Hansen says:

    The notorious incidence of porn use at the SEC was generated by Wall Street, since the prestige of Royalty/Goldman Sachs was being tarnished. Don’t call it fraud or treason, royalty should be allowed to bet against everyone, including other countries, screwing them unfettered and with nary a quarrel.
    Every growing boy and girl in the USA should have a clear picture now of how the game is completely rigged to money which brings access, and total power. The concept of Justice is how anthropologists will describe it at some point in the future, not what we’ve been led to believe.

  2. Bobbi Swann says:

    Whoohoo!!! Mr. Denninger you are going to have a lot of people lining up for the transplant!!! But in the meanwhile, let’s just see how this all gets played and if picked up by mass media how it will spin and spin and spin!

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