"The Stock Market Is Rigged"
It is always gratifying to find documentation vindicating viewpoints I had previously been challenged on in here!
"In the hands of a lesser writer, the story of how high-speed traders are skimming pennies off transactions on Wall Street could be mind-numbingly arcane. But Michael Lewis, the Vanity Fair contributing editor and best-selling author of Moneyball, Liar’s Poker, and The Blind Side, knows how to tell a story, even one that he freely admits is dauntingly impenetrable.
“If it wasn’t complicated, it wouldn’t be allowed to happen,” Lewis told Steve Kroft in a 60 Minutes segment that aired last night. “The complexity disguises what is happening.”
He added, “The stock market is rigged.”
In a nutshell, Lewis writes in his new book, Flash Boys: A Wall Street Revolt (itself an outgrowth of this Vanity Fair article from 2013), what’s happening is that some savvy, if unscrupulous, traders are using their ability to operate faster than everyone else to make some free money. The easiest technique to explain involves spotting someone else’s intention to purchase some stocks, jumping ahead of them to make the buy, and then selling the shares to the intended buyer at a slightly inflated price. (In fact, Lewis explains in this excerpt, these high-speed traders make a lot more money on something called “slow-market arbitrage”: “This occurred when a high-frequency trader was able to see the price of a stock change on one exchange and pick off orders sitting on other exchanges before those exchanges were able to react.”)"
On NPR just now, I heard Lewis state that this separates those trading on the stock market into prey and predators.
An awareness of this predatory behavior has led to a call for use of a fair exchange that will protect investors from exploitation by high speed traders, called the Investor's Exchange, which began in October, 2013.
Here is a link that is probably relevent:
It was just metioned on PBS that high speed high frequency trading is now being investigated by the FBI, etc.
Here is a link that might be useful: Vanity Fair Online Daily