Courtesy of Pam Martens.
Senate Agriculture Committee Hearing on May 13, 2014 on High Frequency Trading in the Futures Market
Since Michael Lewis first uttered the immortal words on 60 Minutes on March 30 that “stock market’s rigged” through the willful collusion of exchanges, large broker dealers and high frequency traders, it has become clear that the public relations game plan of the regulators and self-regulators is to pray for a technology-challenged Congress and a gullible public.
J. Bradley Bennett, Executive Vice President of Enforcement at FINRA, the industry’s self regulator, suggested that high frequency trading was no different than buying a first class ticket on an airplane. (Wall Street On Parade suggested that this is only true if one has also hijacked the plane and robbed the passengers in coach.)
Next up was SEC Chair Mary Jo White who flatly told the House Financial Services Committee on April 29 that “the markets are not rigged” despite three books and dozens of research papers documenting the opposite conclusion. On Tuesday of this week, Terrence (Terry) Duffy, Executive Chairman and President of the CME Group, which operates the largest futures exchange in the world, appeared before the Senate Agriculture Committee to testify that his market was pristine and was delivering a “level playing field” to all comers. (Operating a level playing field is not negotiable for an exchange; under U.S. law, an exchange serves as a self-regulator and must police itself and its members to guarantee a level playing field for all.)
First Duffy testified that “Our market data is sent to everyone at once. While customers have several options in terms of how they can receive data from us, we do not restrict access. Having multiple connectivity options makes our markets accessible to a broader array of participants.”
Then Duffy went on to explain co-location to the skeptical group of Senators, telling them:
…
