The NYSE was fined a paltry $5 million for releasing data to preferred customers before releasing it to the broader public. This is one component of final trading speed. Another is how quickly an entity can access and trade information (even if it's all released at the same time). Certain customers – due to their technological advantages – receive and react to the data quicker. Moreover, the Fed admittedly manipulates the market as its third, unwritten, unofficial mandate. ~ Ilene
Charles Hugh Smith, Of Two Minds, argues that we should stop participating in the popular markets and start new ones (excerpt below).
New York Stock Exchange Settles Case Over Early Data Access
In the latest federal action against a major exchange, the New York Stock Exchange settled accusations on Friday that its trading data gave select clients a split-second advantage over retail investors.
The Securities and Exchange Commission issued a civil enforcement action citing the Big Board for “compliance failures” that allowed certain customers to receive stock data before the broader public. The improper actions, which began in 2008, ran afoul of safeguards set up to promote fairness in a system known for favoring elite investors.
The S.E.C. forced the exchange to adopt a battery of internal controls and pay a $5 million penalty. While the fine is a token sum for the country’s biggest and most prominent trading platform, it represents the first penalty the agency has levied against an exchange…
Keep reading: New York Stock Exchange Settles Case Over Early Data Access – NYTimes.com.
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We Need a New Stock Market
Courtesy of Charles Hugh Smith, Of Two Minds
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…
If the traditional heavy-weights foolishly continue providing the "dumb money" that's being skimmed, perhaps retail investors could start a small, limited exchange that banned HFT [high frequency trading], front-running and all the other manipulations. Such a market could restore one of the market original purposes, raising capital for new enterprises, and enable small retail traders access to an unmanipulated market…
