The SEC has proposed banning flash trading.

Investors that have access only to information displayed as public quotes may be harmed if market participants are able to flash orders and avoid the need to make the orders publicly available,” Chairman Mary Schapiro said.  Schapiro asked her staff in August to draft rules that “eliminate the inequity” that flash orders cause, as part of a broader review of trading in dark pools, which are broker-owned markets that don’t display quotes to the public.

Democratic Senators Charles Schumer and Ted Kaufman urged the commission to halt the practice, arguing frequent traders use technology to profit from access to information not available to retail investors.  “The SEC has done what we asked for,” Schumer said in a statement today. “This proposal will once and for all get rid of flash trading, which, if left untouched, could seriously undermine the fairness and transparency of our markets.”  High-frequency trading strategies may now account for 70 percent of share volume in the U.S., according to Patrick O’Shaughnessy, an analyst at Raymond James & Associates.

Wow – 70%!   Gee, if you thought volume was low lately, wait ’till you see what happens when they shut down Goldmans pump-bots…   Congrats to our friends at Zero Hedge, who pointed out this practice in July and helped turn it into a national issue – that’s blog power! 

Congratulations also to the Federal Reserve who boosted their balance sheet by Billions(of toxic assets) and now hold over $2Tn worth of mortgage and financing debt that banks could not find any private buyers for.  $51.9Bn worth of Fed cash was exchanged for bank “assets,” not for the month of August, but for the WEEK of September 9th!  That’s on pace for $2.7Tn a year in handouts asset purchases so small wonder the financial sector is on fire as they are being fueled by a massive pile money that we are burning (according to the M1 for Sept 7th) at a rate of $31.6Bn a week ($1.66Tn a year).  No wonder people are buying gold!

I don’t want to get all preachy on a Friday (we save that for weekends) but someone has to combat Cramer’s nonsense so I’ll just say this.   Our economic “recovery” so far is like if one of your neighbors, who just lost their job and can’t pay their mortgage, suddenly starts having parties and buying new cars and going on shopping sprees.  You may say to your neighbor “Hey, that’s great…
continue reading