If there is one thing I understand about historical transformations, it is that they always begin when more than a few people have had enough. Usually, some calamity or a serious lack of some basic right or necessary commodity, such as food, jobs, or freedom forces people to finally stand up and say “enough.” Currently, the world is seeing political transformations right and left, and the reasons are a lack of freedom, jobs, and, in some cases, a lack of food. People are standing up and saying “enough.” Though less publicized, the world is also seeing dramatic economic transformation in the form of a response to the financial calamities that have befallen the world in the last thirty months, or so. Again, people are standing up and saying “enough.”
U.S. regulators should stem the growing tide of anonymous stock-trading and consider charging high-frequency traders fees for the disproportionate amount of orders they send into the marketplace, said a panel of experts advising how to avoid another “flash crash.”
The financial collapse of 2008 and the Flash Crash of last May have fired people up, and it is about time. For too long, the fat cats who dominate the markets have had their way. It is time to level the playing field, at least to some degree. By the way, although not explicitly mentioned above, the reference to “anonymous” stock trading could very well apply to “dark pools,” of which some forty exist in the market today. Talk about a lack of transparency.
The report defines 14 recommendations for the Securities and Exchange Commission and Commodity Futures Trading Commission. Taken together, they would significantly overhaul the high-speed market that has gone increasingly electronic in the last decade. Notably, the eight-member panel suggested the SEC consider forcing the banks, hedge funds and others that trade stocks outside of the transparent exchanges to provide a minimum level of price improvement.
The key word above is “forcing.” Unfortunately, often this is what big transformation comes down to – force. The truth is that those who have something beneficial to them never want to give that thing up, so they resist, and the only way to make the change happen is to force them to change. High-frequency trading needs reformation to make trading fairer for the rest of us, and by “us,” I mean the individual trader/investor. We are many, and we should be seen as such.
As to the “bust” of 2008, the economic powers are also saying enough, and they are now seeking through regulation a path to a more stable economic cycle. “Hallelujah,” I say. Personally, I’ve had enough with the roller coaster rides we’ve all been on, at least for the last thirty years, or so.
Gradually smoothing global imbalances of trade and investment is a top priority for G20 officials. Officials have set the goal of drawing up a list of indicators to measure imbalances, with the aim of making growth more stable and less prone to cycles of boom and bust.
Transforming that which makes a few tons of money is difficult, and it will take time, but, at a minimum, the problems are now being discussed and solutions are being proposed. Hallelujah!
Trade in the day – Invest in your life
