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The SEC Seeks Your Advice On How To Fix A Broken Market
Once we have the proper link where readers can send in their angry comments, we will share it with you. The only way the system will ever change, and the high frequency scalpers will be put into submission, is if the SEC realizes that the market belongs to more than just a few hundred HFTs and broker-dealers.
Washington, D.C., Jan. 13, 2010
The Securities and Exchange Commission today moved forward with a broad review of the equity market structure, voting unanimously to issue a concept release seeking public comment on such issues as high frequency trading, co-locating trading terminals, and markets that do not publicly display price quotations.
The U.S. equity markets have undergone significant change in recent years from a market structure that relies on people shouting on the exchange floors to one that relies on advanced computer technology. The speed of trading has accelerated from seconds to milliseconds to microseconds. Trading volume has expanded, and new trading centers have entered the markets and captured a significant share of volume. Liquidity is now dispersed among many different venues, and these venues offer a complex array of order types and other trading services.
In conducting this review, the Commission seeks to ensure that the current market structure serves the interests of long-term investors willing to accept the risk of equity ownership over time and are essential for capital formation. These investors include individuals who invest directly in
equities, as well as retirement plans and other institutional investors that invest on behalf of many individuals.
"At the Commission, we must continually assess how changes in the market are affecting investors," said SEC Chairman Mary L. Schapiro. "We must try to understand how these changes may impact the markets in the future, so we can steer clear of any unnecessary risks to investors."
The Commission is assessing how all types of individual investors and all sizes of institutional investors small, medium, and large are faring in the current market structure. It also is assessing whether the current market structure promotes capital formation in companies with varying
levels of market capitalization.
The concept release requests comment on all matters related to market structure. In addition, it asks many specific questions about the current market structure, including:
Market Quality Metrics
What are the best metrics for assessing market quality for long-term investors and have these metrics improved or worsened in recent years?
Fairness of Market Structure
Is the current highly automated, high-speed market structure fundamentally fair for investors?
High Frequency Trading
What types of strategies are used by the proprietary trading firms loosely referred to as high frequency traders, and are these strategies beneficial or harmful for other investors?
Is the overall use of any harmful strategies by proprietary firms sufficiently widespread that the Commission should consider a regulatory initiative in this area?
Co-Location
Do co-location services (which enable exchange customers to potentially route trades faster by placing their computer servers in close proximity to an exchange's computer system) give proprietary trading firms an unfair advantage?
If so, should the proprietary firms that use these services be subject to any specific trading obligations?
Dark Liquidity
Has the trading volume of undisplayed trading centers (such as dark pools) reached a sufficiently significant level that it has detracted from the quality of public price discovery?
If more individual investor orders were routed to public markets, would it promote quote competition in the public markets, lead to narrower spreads, and ultimately improve order execution quality for individual investors beyond current levels?
Are a significant number of individual investor orders executed in dark pools and, if so, what is the execution quality for these orders?
The Commission's ongoing review already has led to several rulemaking proposals that are narrowly targeted to address discrete issues and intended primarily to preserve the integrity of longstanding market structure principles.
One proposal would ban flash orders, which enable a person who has not publicly displayed a quote to see orders less than a second before the public is given an opportunity to trade with those orders.
Another proposal would strengthen transparency requirements for non-public trading interest, including dark pools of liquidity which are a type of alternative trading system that does not display quotations to the public.
In addition, the Commission today proposed for public comment a new market structure initiative to strengthen the risk management controls of broker-dealers that provide market access.
The Commission intends to use the public's comments on the concept release to help determine whether additional regulatory measures are needed to improve the current equity market structure. Public comments on the concept release must be received by the Commission within 90 days after its publication in the Federal Register.
The full text of the concept will be posted to the SEC Web site as soon as possible.
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You build the octogon. Two agencies enter, one agency leaves.
The SEC asks for honest markets that represent the investor (just go with me on this)
The UST need tax money from pumped markets, and uses it's criminally insane assistant, The Fed, for help via the back door.
In Bartertown, who wins?
Reinstate Glass-Steagall - the 1935 version of it - and the Bank Holding Company Act of 1956.
If we do those two things then we don't have to worry about any other financial reforms because all the major banks would have to be broken up.
1) Stop Ben Bernanke from participating in the equities market.
2) stop his proxies from participating with our money
3) audit the Fed. then end this third central bank.
Fire Mary Shapiro. Yesterday.
This.
ummm, let's see.
howz about enforcing the laws already on the book on all market participants, regardless of size or political connections.
Trim your wolfwoman snatch and send the pubes to Mr. Blankfein so he can cover his head during these cold winter months.
I am Chumbawamba.
OMG, I am laughing so hard my eyes are watering.
ROTFKNFLMAO!!!!!
Pubes Bitches!
So two years later they launch a committee to perform a review. No doubt the first three months will be spent choosing a Chair for the committee.
You're right on top of that shit SEC!!
Make sure you sign "Lloyd Blankfein" under your suggestions or Mary will just throw them away.
A. So is someone actually worried?
B. Is someone merely trying to look like they are worried and don't give a crap?
C. Is someone merely trying to look like they are worried to throw up a smokescreen around something else they really are worried about?
Shine light here, they scurry over there. This is a madhouse we are in folks.
I don't know what is scarier:
1. They have a plan and it is going perfectly.
2. They have a plan and it ain't going as well as they hoped.
3. There is no plan.
I vote for C and 2. The Lucy Ricardo scenario.
Agree on C and 2. I love multiple bad choices.
Answer to C is pension funds and insurance companies.
Comment on 2 is that they grossly underestimated depth and duration.
OK so Mary is admitting she doesn't have a clue.
And none of her employees can agree on what to do.
The time for this administration to replace her is clearly overdue.
It is always impressive when the cops ask ordinary citizens how a policeman should act.
Insanity Continues.
If they succeed and purify the markets, it will be more exciting to watch paint dry than put money into stocks.
We all know why markets crashed in '08. Subprime crisis had as much to do with it as imploding bank assets. It was orchestrated and the same players that pulled the plug in '08 will do it again. The house always wins.
buzzsaw99 to sec:
DIE MOFOs!!!
Man, You guys didn't catch on yet? Don't you realize that a Dude that was part of GS is running the show with Mary Shapiro? I'm sure there is a member of GS in every Goverment Agency. Do you really expect a fair playing field? GS runs the country. I don't even make the big bucks and I figured that one out.
'To me the SEC is utterly irrelevant. It is the federal fig leaf over the securities market. Bring back Joe Kennedy ... bring back free markets ... get rid of these people.' - James Grant
Here it is....
The exchanges must be defragmented....and made RETAIL oriented....
The question is what is better ?....A market that is comprised of millions of RETAIL accounts that fend for themselves.....
Or an unlevel playing field whereby better information is
held out for the few....who not only own the firms .....but the govt./corp. revolving job door as well ????
The exchange should be the most efficient model....ie the BATS model...
Information should be fact based....and made handy to everyone....
No dark pools or off exchange matching of anykind allowed.... All transactions must occur on the exchange....
Also transaction costs should be no more than 20 cents per hundred units....RETAIL is being gouged by having to pay many times 20 cents because of ignorance and an unwillingness to participate because of a lack of trust....
Today is the age of the computer.....which means ease of access to information....
The market should not consist of a handful of large managers ....as this does not make for the best marketplace....
Stocks and debt should be the mainstay of wealth and opportunity....and should be shielded from all and any taxes ....in the name of efficient capital....
In order to really fix the system, you have to first get all the Fraud Street people out of positions of the regulatory agencies and government. This is how ALL of our government is being run. Bigshots from the ag industry fill the undersecretary positions in the USDA. Selected people from the health industries fill the FDA and related agencies, and the oil industry has it's people in the DOE. The government is being run by big business, for big business. Until that changes, your wasting our time, bitch. There is no change to believe in- it's the same old self-serving crooks with a different party designation.
Two words, SEC: Kill yourself.
All this time and WTF have they done?
What has changed?
Mortgage crisis, Bernie Madoff, 'Too big too fail'. All that shits apparently been and gone and what reforms are there to show for it?
(I'm sure they managed to pinch a few individuals for insider trading though)
For anyone that's interested here's the 2009 'performance and accountability' report for the SEC.
http://www.sec.gov/about/secpar/secpar2009.pdf#2009review
The process of bureaucracy is devastating in a crisis. Hence, our consitution gives our president significant powers to act in a moment's notice.
But what happens when corruption has infested every aspect of our democracy with bank industry cronnies? That is the status quo.
Since the constitution gives our government the right to coin money ... why does the government borrow it at interest from the privately-held central bank?
I tried explaning the situation we are in to some intelligent people I thought could comprehend it ... and instead what I found was that the complexities are so great, that their brains stop processing the information and revert to the notions of trust.
We choose leaders because we trust their ability to discern complicated scenario's and make effective decisions that are both fair and prudent ... sometimes not popular.
I laughed at the first person to tell me that the government was considering giving billions of free dollars to the banking industry [TARP]. What? WTF? Was he kidding?
He was convinced because the leaders conveyed the notion that the economy would fall apart without it ... his money would be gone!
People still want to eat, right?
People still want a nicer house and a nicer car, right?
Demand wouldn't be going anywhere ... but he believed that demand would disappear because the banks wouldn't exist.
Faux demand would disappear. Easy credit and the boom times that come with unearned income would disappear. His uninsured savings account that he invested in ... would disappear.
There is nothing more pathetic than listening to someone proclaim that American's are not socialists. We've been a socialist economy since the Great Depression. Fear of the words socialism and communism feed a frenzy of voters that don't understand the mechanics of the economy nor the farce behind the Federal Reserve System ... and then we are back to trying to explain to them what is wrong and their brains just shut down.
In laymans's terms ... the banks are peeing on your leg and telling you it's raining.
Affable morons who "trust" authrotiy figures and leaders willingly march in-step with them promoting their lies.
All I know is ... I don't have any urine on me, because I never believed the lies. And I don't have a civic responsibility towards those who are over invested with the gaggle of liars.
The solution is effective leadership.
In the absence of a president willing to charge these obvious criminals with treason or other high crimes one can only surmize that the show will go on.
Inflation. Hyper-inflation. Severe volatility.
These are the new norms.
.I'm feeling a little volatile, myself
Americans are damn tired of the lies, the misdirection and the utter failure of The Obama Administration to do what they promised to do - that is, to not be an administration catering to the banksters.
"I did not run for office to be helping out a bunch of fat cat bankers on Wall Street," Mr. Obama said in an interview on CBS's "60 Minutes" program on Sunday.
YOU ARE A LIAR MR. PRESIDENT.
http://tinyurl.com/ybjcvzq
As I wrote in another post:
It's a scandal the SEC doesn't calculate and distribute the most basic statistics about the markets it regulates - effective and realized spreads, for example. As far as I can tell, it doesn't do much economic analysis at all, and for an agency that pretends to regulate vast sectors of our economic life that is nothing short of astounding. The SEC often says it doesn't have the resources it needs - despite a tripling of its budget since 2000, and a proposed doubling again in the next few years, for a net swing of 6X from 2000 to 2013. What does it need to be able to collect and disseminate the most basic metrics of our capital markets? Why on earth do we have to wait for "a variety of independent parties" (as Senator Kaufman wrote) to do the most basic data analysis for a billion-dollar-a-year agency? Remarkable.
And here I'll add:
It's equally astonishing they publish a concept release asking what the best market quality metrics are. Don't they know? And if they know, why aren't they calculating and publishing them?
A bullet in the entrenched and too big to fail SEC.
Return the control of the nations finances to its public, and Congress - not some old fashioned racket known as the Federal Reserve "make your friends rich and your poor eat each other" Bank.
Stop taking bribes from Wall Street.
All this will work itself out, and the SEC will provide nothing constructive to the brew. There is no "fix" at this point. What the market is going to do is crash hard.
Mary, you think mom and pop aren't playing in the sandbox now? Just wait. There won't be securities market with little guys to feed on soon.
Dear SEC,
You're fired. I am never coming back.
Do not report to work tomorrow, don't call or write again.
Steve
Destroy it, break up all participant institutions and count and account for every dollar and cent. If it's leverage and vapor it's not counted.
100% transparency, timing and information neutrality.
Anything less, and I too am never coming back.
Too late, no casino run by gangsters gets my money and the way I see it, they owe ME money already!
FIRE Mary Shapiro!!!
She is the QUEEN of all of the Corporate Facists, and the ultimate crony capitalist of ALL TIME.
This is a sick joke being played on America. She belongs behind bars.
she belongs at the end of a rope
LOOK at your televisions closely tonight. See the chaos that is HAITI right now?? Mass destruction and NO ONE to protect them or provide for them??
I strongly believe we must prepare. One way or another, one crisis or 10 hitting all at once--This will be our country soon-- A financial Katrina is surely inevitable with such incompetent and criminal people now in charge!!
STEP DOWN MARY SHAPIRO!!
I think the best way to regulate the market is by instituting bonuses for SEC employees based on the fines they are able to collect from financial firms for violating security laws.
First, stop using the word "metrics".
Theft is lightning.
Justice, glacial.
Dear Mary, dear me; I’m Whelmed.
Mary Schapiro, proposing a rule on “naked access” for high frequency traders continues to pretend there is any legitimacy at all to automated high-frequency traders activity. It is a bold attempt to convey she is actually doing something other than
pandering to her apparent Wall Street masters’ wishes to continue high frequency market distortion, high frequency market “noise” with ample opportunity for high frequency market manipulation.
A player with riskless profit undermines the possibility of a level playing field when all other players must assume risk and give up
profit to the player without risk – simple.
High-frequency trading is done to exploit the opportunities that present themselves in a small price area around bid-offer spreads.
It is high frequency because by trading many small price increment trades with no long term investment reason or view, even randomly up and down, it is possible to accumulate significant profits without actually being subject to significant or any risk.
For the market at large it is unfair in the first instance by cutting off other players opportunity to even see or respond to these price moves by using temporal advantage technology which is even offered by the exchanges themselves. In a sense anti-trust rules are being violated if exchanges and brokers with similar tools are colluding with clients to undermine or circumvent fair markets as well as SEC rules.
Even worse, when hft is allowed, the market becomes extremely subject to manipulation by these traders. A high frequency trader with a partner in the “slow” market (or without one) can derive illegal gains by cheaply moving prices up and down to create opportunities for profit while neatly concealing the market manipulation with the relatively small seemingly random activity and then doing their high frequency theft. (--All probabilistically predetermined to appear random to other machines!)
These trades may also add artificial misleading increases in volatility (which is also traded) since they are occurring for no market equity value reason but moving prices up and down much more frequently than would occur without hf ‘trades.’ The extraneous market motion amplifies volatility further distorting the view of what if anything is happening in the market (besides hft). Consequently, any volatility market is inflated, distorted and easily can be manipulated for illegal gain as well.
High frequency trading combined with proposed rules against shorting stocks also creates a imbalance (pointed out in Zero Hedge previously)
which can easily lead to the market price rising for no reason except
high frequency trading with no countervailing pressure to correct the price downward to its an ‘actual’ unmanipulated price. This
ends in yet another crash-tastrophy which may only profit the high frequency in-crowd if they could manage to survive such a debacle.
If Mary S is really so ignorant of how markets work that she can’t see or understand riskless technological arbitrage undermines the very
principles of stock market fairness as a level playing field, she should resign or be fired. If she isn’t ignorant and is complicit in allowing high frequency trading and technological dark markets with similar flaws --such as no transparency whatsever-- then it turns all this activity into criminal conspiracy instead of the mere rape of U.S. equity markets which the SEC fails to control or understand.
You ask your master for guidance or you rule the market if you are the regulator. You don’t pretend to ask ‘the people’ who don’t understand your game, to see what you can get away with stealing from them.
I don't know what kind of security clearence you'd need to read the responses. But I'd love to be a fly on that wall.