Submitted by Charesl Hugh Smith from Of Two Minds
We Need a New Stock Market
We need a new stock market exchange that is a transparent, retail-trader friendly alternative to the manipulated HFT-dominated pseudo-market we now put up with.
As I noted in The Stock Market Is an "Attractive Nuisance" and Should Be Closed, the stock market now bears little resemblance to traditional markets. Today's market has as much in common with the market of the 1960s as a horse-drawn carriage has with a Formula 1 race car. Most of the trading on the market is done by computers that hold shares for perhaps 11 seconds before skimming a slice from investors who lack the high-speed data flows from the exchanges, warp-speed processing power and sophisticated algorithms.
Can the current pseudo-market be restored to a true open market? To explore this question I contacted financial reporter Scott Patterson, author of the new must-read book Dark Pools: High-Speed Traders, A.I. Bandits, and the Threat to the Global Financial System (print) (Kindle).
CHS: Your book poses this question: what can we do to restore the integrity of our stock markets?
Scott: This is essentially the role of the SEC, and it’s pretty clear that they’ve dropped the ball. In part this is due to the dramatic speed of the technology revolution that has completely overhauled the market. It’s easy to forget that just 10 years ago humans dominated trading. While, as I show in Dark Pools, the revolution had already begun in the early 2000s – sparked in many ways by Josh Levine and The Island ECN he build – it remained in its infancy. But now it’s clear to anyone
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Realist - Everybody in America is soft, and hates conflict. The cure for this, both in politics and social life, is the same -- hardihood. Give them raw truth.
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