Tuesday, August 4, 2009 EST

Its is official! The SEC acted to stop High Velocity Trading.

From Bloomberg

SEC to Ban Flash Trades of U.S. Stocks 

The U.S. Securities and Exchange Commission will seek to ban flash trades that give some brokerages an advance look at orders, Senator Charles Schumer said, citing a conversation with SEC Chairman Mary Schapiro .

Schapiro assured Schumer in a phone call yesterday that the agency plans to ban the practice, according to a statement from his office. In a separate release, Schapiro said she has asked her staff to draft rules that “quickly eliminate the inequity” that flash orders cause.

“It’s preferencing one group over another, and that’s not the way markets should work,” said Michael Panzner , author of “The New Laws of the Stock Market Jungle” who once traded for George Soros ’s hedge fund. “It certainly on its face seems unfair and up until now was against the spirit, now perhaps against the actual rules, of fair play.”

Friday, July 24, 2009 EST

High frequency trading is in the news again. The common investor is getting scalped for pennies (or more) on each trade while companies like "Golden Slacks" (Cramer-ism) makes money each day in the market with little or no risk. 

Any investor, trader, speculator that knows of this should email the SEC and complain about it. It is not about faster computers, but it is about SEC allowing companies to have these fast computers right at the exchange. The software opens and cancels trades in milliseconds to see what is out there.

This is theft. I called into NPR on the Diane Rehm's show and asked a group of investment experts about this issue. They laughed and said it is about competition. I was not able to make a follow up comment, if I was I would have told them they were incompetent.

If you do not have a computer on the exchange floor to steal pennies or more per trade then you (and I) are being ripped off.  You can reach the SEC at tradingandmarkets@sec.gov

New York Times:

"Nearly everyone on Wall Street is wondering how hedge funds and large banks like Goldman Sachs are making so much money so soon after the financial system nearly collapsed. High-frequency trading is one answer. "

"And when a former Goldman Sachs programmer was accused this month of stealing secret computer code — software that a federal prosecutor said could “manipulate markets in unfair ways” — it only added to the mystery. Goldman acknowledges that it profits from high-frequency trading, but disputes that it has an unfair advantage. "

Read the full article here

 
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