Ex-NYSE Chief Admits "It's Not A Fair Market... It's Bad For The Country"

Tyler Durden's picture

When a digital dickweed exposes the reality "the equity markets are broken," it can be shrugged off as the rantings of a kid in his mom's basement. When an experienced investigative writer claims "the markets are rigged," it is drowned out with mainstream media propaganda forcing words like liquidity and cost-effective-ness to hide the truth. But when Dick Grasso, the former head of the NYSE says Black Monday's flash-crash exposes the reality that "it's not a fair market," it is going to be hard to regain the collapsed confidence of an investor-class multiple-times-burned by an ever more arrogant group of 'operators' on Wall Street.

 

Here is what we have been saying for years (and most recently here)...

If HFTs did anything, it was merely to frontrun the buy orders once the selling wave - halted thanks to limit downs being hit - had exhausted itself, and the buying scramble was unleashed around 9:35am leading to a 5% move in less than 10 minutes! It was here that Virtu made its colossal profits, however not from taking the least amount of risk, but merely from frontrunning order flow into a stil chaotic market with gargantuan bid-ask spreads, which incidentally not only does not provide liquidity, but reduces it as it competes with other buy offers for any market offers, also known as "providers" of liquidity, only to immediately flip the transaction to those buyers which Virtu knew with 100% certainty were just behind it. In any other market this would be illegal, except for one in which Reg NMS has made such frontrunning perfectly legal (courtesy of billions spent by the same HFTs who now benefit from it).

And, as The Wall Street Journal reports, former NYSE head Dick Grasso agrees...

Regulation NMS, which stands for national market system and was designed to link all the U.S. markets, was a “sad, sad experiment.”

 

The regulation, which was passed by the Securities and Exchange Commission in 2005 and implemented in 2007, was designed to ensure investors got the best price available on any public U.S. market. It knitted together all the exchanges and trading venues across the country to create a single, though disparate, market. It required transactions be conducted at the “national best bid or offer,” meaning each venue had to continuously check the prices available at competitors to verify a transaction was compliant. It also meant the NYSE no longer had a monopoly on trading in its own listed stocks, helping spur a host of competitors.

 

The rules contributed to market hiccups like last month’s swings because they allowed for a major expansion in the number of places where stocks could trade, he said.

 

“No one anticipated 60 different venues where an IBM or a Microsoft trades,” he said during the television interview.

Mr. Grasso told the Journal that he recommends a broad-based review of the markets as a first step toward addressing the problems he sees...

A fast market is not necessarily a fair market, as evidenced by that Monday open,” he said in a clip of the interview viewed by The Wall Street Journal, referring to the tumultuous early trading on Aug. 24.

 

The action that day has drawn scrutiny from regulators, exchanges, institutions and everyday investors—and sparked discussions about how to tweak the market to prevent similar problems. There were nearly 1,300 trading halts, most of them in the first part of the day, and some stocks dropped rapidly before recouping losses in a matter of minutes.

 

“Frankly, some of the things that went on that day need very close scrutiny,” Mr. Grasso said in an interview Friday with the Journal. “A day like that, where Facebook’s shares go from $86 to $72 to $84 in a matter of minutes will cause the public to lose confidence in the markets.

We leave it to Mr. Grasso to conclude, rather more honestly and ominously than we are used to for anyone 'in' the club...

“Creating an advantage to an institutional user or a particular type of trader that disadvantages the retail investor is bad for the country, bad for the markets and bad for your business."

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SandiaMan's picture

Grasso is an Asso

AlaricBalth's picture

As Chairman of the NYSE in the early 2000's, Grasso laid the groundwork for the current system of trading. He then walked with away with a highly controversial $140 million golden parachute.

It's easy to bash a system, when at first you have profited handsomely from it, and milked it for all its worth, prior to its inevitable demise.

lo2hi's picture

That's what all socialists billionaires, think Soros, do, have done, and will continue to do.

centerline's picture

Maybe he can hear the pitchforks being sharpened.  Chances are though it is just another angle.  These fuckers never change.  It's in thier DNA.

Palladin's picture

Here's a pretty good article from the NY Times about Grasso and the outrageous pay package. Note all the people mentioned in the article. Reads like the Who's Who of Banksters.

http://www.nytimes.com/2006/06/25/business/yourmoney/25grasso.html?pagew...

Fahque Imuhnutjahb's picture

 

 

You know it.  Looks like he's pulling a Sandy Weill.  Now we need Angelo Mozilo to tell

us sub-prime NINJA, liar loans were a bad idea. Also, the investment banks can tell us

what a bad idea packaging, and securitizing afore mentioned loans was. And the rating agencies

can tell us how dog shit shouldn't get triple A ratings.  And the hedge funds and brokers can

tell us how bad it is to sell afore mentioned dog shit to pension administrators, who can tell

us how taking kick backs from Black Rock et. al.  undermines fiduciary duty.  clUSter fuck nation.

We're #1, we're #1, we're #.....awww fuck it.

JustObserving's picture

If you did not know that market regulators had been captured by the moneyed interests decades ago, you should not be trading in the "markets."

Regulatory Capture, Captured on Video


SEC official slobbers over private equity titans, suggests his son might want a job in the field

http://www.rollingstone.com/politics/news/regulatory-capture-captured-on...

Dre4dwolf's picture

Insiders buy the chips, Federal Reserve raises the value of the chips, insiders sell the chips, value of chips go down, pawns catch the falling knife.

Rinse Repeat

 

Clowns on Acid's picture

Dick...Thanks....you are only 5 years late.

Jus7tme's picture

What Dick Grasso (of NYSE) says about HFT and interlinked trading venues is true, but the only reason he is saying it is that NYSE has been losing their monopoly on ill-gotten profits.

Note also what he says:

“A day like that, where Facebook’s shares go from $86 to $72 to $84 in a matter of minutes will cause the public to lose confidence in the markets.

Dick is worried about the "confidence" people may or not have in the "markets". If Dick was a moral person, he should worry about the CORRECTNESS and FAIRNESS of the markets, to all participants, not whether people have "confidence". If the markets operate correctly, then people will have confidence. But it is more profitable for Wall St to put the cart of "confidence" in front of the horse of correctly operating markets.

wmbz's picture

Pricks like little Dick Grasso never say shit like this when they are inside the "game" they always wait till they are out.

Everyone knows it's rigged, unless you are a full blown retard.

So fuck off Dick you little bitch!

Wahooo's picture

As he approaches his meeting with the guillotine, he suddenly decides he doesn't want to go.

brucekeller's picture

The worst part about that day was not being able to login to sell my puts for far far greater profit. I had the limit orders way too high. :\  I had some TSLA puts for example...

Bunga Bunga's picture

Defining it as "market" demonstrates his ignorance for the reality. It's the biggest manipulation in human history.

thunderchief's picture

Yes, nice to get a word from another has been,  who is now irrelevant,  talking about a broad day robbery,  HFT,  which happens at the same bank, same time, every day.

That's even more corrupt. 

Atomizer's picture

Fuck you. Another Hillary hostage socialist apology. You knew this fucking shit has been going for years. They should drag you behind a Toyota Prius. Oh the irony. 

Ms No's picture

If Grasso was warning about this years ago that is one thing but anyone who is coming out with statements or calls like this when it is already game over can kiss my ass.  Wasn't Gingrich pulling some BS like this lately.... bitch please.  If you weren't out warning people when there was still something that could be done about it you were part of the problem.

Trump has made the psychopaths who can only observe our empathy realize that we are collectively in desperate emotional and physical need of a hero and someone who will tell the truth and now they are coming out in trying to mimic that need.  Expect to see much of these very late calls or admission of the obvious.

divedivedive's picture

I think the word hero is one of the most abused lately in the American language.

Booked's picture

I wait with gritted teeth to hear "the word" spoken whenever an MSM broadcast starts!

Ms No's picture

I would agree.  They know that people are predictably going to be looking beyond themselves for a hero archetype whether that is the sensible thing to do or not.  This has always been a tactic to some extent but now it seems to be entering the daytime drama phase.  On the bright side watching various clumsy and soulless politicians and bankers clawing over eachother while attempting to embody the hero should be entertaining.

Actually never mind, it wont be funny, it will be sickening.  If there is a bright side it will be that their poor acting will expose them.

A Lunatic's picture

Those raking in the profits make the rules, so I see nothing changing anytime soon. The general public will continue to bend over and forage for crumbs. Same as it ever was..........

Atomizer's picture

How quickly can they dodge a automatic 30 round clip. The sniper is 1/4 mile away. Good luck trying to escape unscathed. 

Arnold's picture

We need another Czar.

Nobody  ever solved anything with violets.

LooseLee's picture

That's right! NO ONE who engaged-in or enabled this fraud on humanity gets out ALIVE!

Able Ape's picture

The market is only good for the .1% riggers who think of the 99.9% as a bunch of depraved niggers...

Atomizer's picture

Entitlements will pave the way to conformance. Stupid fuck are caught in their own lies.

PelosiUnemployment Checks Fastest Way to ...

 

Conax's picture

It's not a market. It is a cashcow for the tribe and kabuki theatre for the masses.  When the manipulations momentarily fail, it is time for tribal  hand wringing, recriminations and crocodile tears lest the muppets wake up to the truth and run to precious metals and pitchforks.

And come straight at them.

centerline's picture

Wish I had more upvotes to give.

klayton biggs bee's picture

Conax who is this "tribe" you speak of?? And what would Francis Sawyer say??

Fractal Parasite's picture

Member for 5 weeks 1 day
You're new here.

Hang around the comments for a bit and it will gradually become clear.

Amish Hacker's picture

Here's another thing that will restore your faith in the fairness of "markets" and the whole freaking game: Grasso's little weekend place in the Hamptons:

http://hamptons.curbed.com/archives/2015/04/03/dick_grasso_puts_sagapona...

 

nah's picture

the shale boom was the best thing to happen to consumers in a while, government risk is a wild card but the bottom line is Uncle Sam value.

.

government wants resources, boom, government wants taxes, boom, government wants war, boom.

.

dont forget to vote, and protect your guns, the government may need them.

ZippyDooDah's picture

Your ass-o is grass-o!

Arnold's picture

i prefer Cyber Douche to Digital Dickweed.

Bay of Pigs's picture

Ironic that some of us were saying this when Brooksley Born resigned from the CFTC back in 1999 when she tried to regulate derivatives but was shot down by Greenspan, Rubin and Levitt. The rest is history.

Grasso is a worthless cocksucker who deserves the firing squad.

Palladin's picture

Here's the entire video from Frontline, Oct, 20 2009.

Worth watching the whole thing, if you can stomach it.

http://video.pbs.org/video/1302794657#

Tinky's picture

I have very mixed feelings about Frontline, but this was one of their very best, and is well worth viewing.

Able Ape's picture

The dearly departed Gore Vidal grew up in the lap of luxury. Years ago in an interview, he said that if you heard the way the wealthy talked among themselves about the common man, you would never vote for one of them. Some things never change...

 

The rich and wealthy STEAL even though they don't need to because "Stolen meat is tastiest"... 

 

And the .1% think of the rest of us as a bunch of niggers [no, I am not a racist; I'm just relating reality as it exists]...


Benjamin123's picture

WTF does anyone care about you being or not racist? Why the disclaimer?

Are you afraid the AIs reading the post will judge your persona rather than the information shared on the post?

falak pema's picture

Is he Madoff's lost brother?

Chuck Knoblauch's picture

no shit, really.

wow.

captain obvious strikes again.

Dr. Bonzo's picture

Thanks for the truthiness. And now what.

SilverFish's picture

Well of course these turds have to wait until they're out of power before they can call out the system. If they did it any earlier, they would never attain those lofty positions in the first place. Sure, Greenspan could have called it out 20 yrs ago, but then you'd never know who Greenspan is. He'd be hanging out with the likes of Ron Paul, screaming at TPTB, marginalized from the get-go and it would be some other ladder-climbing douche-bag in his position who cares very little about how his actions effect the system. 

 

Always amazes me that people get people allow themselves to get riled up over this kind of thing. This is the only possible way it could play out. What did you expect?

klayton biggs bee's picture

Digital dickweeds??? That's just rayciss!

world_debt_slave's picture

what was his payday when he retired

Seasmoke's picture

Fuck You Dick , you bald head looking Dickhead. Go suck a bag of dicks.