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Guest Post: We Need a New Stock Market

Tyler Durden's picture


Submitted by Charesl Hugh Smith from Of Two Minds

We Need a New Stock Market

We need a new stock market exchange that is a transparent, retail-trader friendly alternative to the manipulated HFT-dominated pseudo-market we now put up with.

As I noted in The Stock Market Is an "Attractive Nuisance" and Should Be Closed, the stock market now bears little resemblance to traditional markets. Today's market has as much in common with the market of the 1960s as a horse-drawn carriage has with a Formula 1 race car. Most of the trading on the market is done by computers that hold shares for perhaps 11 seconds before skimming a slice from investors who lack the high-speed data flows from the exchanges, warp-speed processing power and sophisticated algorithms.

Can the current pseudo-market be restored to a true open market? To explore this question I contacted financial reporter Scott Patterson, author of the new must-read book Dark Pools: High-Speed Traders, A.I. Bandits, and the Threat to the Global Financial System (print) (Kindle).

CHS: Your book poses this question: what can we do to restore the integrity of our stock markets?


Scott: This is essentially the role of the SEC, and it’s pretty clear that they’ve dropped the ball. In part this is due to the dramatic speed of the technology revolution that has completely overhauled the market. It’s easy to forget that just 10 years ago humans dominated trading. While, as I show in Dark Pools, the revolution had already begun in the early 2000s – sparked in many ways by Josh Levine and The Island ECN he build – it remained in its infancy. But now it’s clear to anyone paying attention that the market has been transformed, like a VW Bug turning into a Formula One race car, and the SEC doesn’t know what’s going on under the hood.


This conclusion isn’t up for debate. Mary Schapiro as much as admitted to Congress last year that she and her agency can’t surveille the market. That really is worrisome for obvious reasons. So what are they waiting for? It’s true that recently the SEC approved the so-called consolidated audit trail, or the CAT, which is billed as a giant eye in the sky for the market. But it’s still in the planning stages and who knows when it will actually be implemented—or whether it will actually be able to capture what’s going on.


CHS: While there are various regulatory “tweaks” that could be put in place (requiring a holding time of 1 minute for all securities, for example), I wonder if we don’t need a more fundamental “re-set” that asks what role the market should play in finance and the economy inhabited by everyday investors.


Scott: I think there are a lot of people in the industry wondering about whether there needs to be a massive overhaul. But it’s probably not a good idea for that to be imposed on the market by the SEC. The uncertainty would be potentially destabilizing. And I just don’t see it happening.


I think the change needs to come from within the market and needs to be imposed by its most important users—I mean, not the high-frequency traders, who are running the show at the exchanges in many ways—but the institutions, the giant mutual fund companies, the pension funds, the long-short hedge funds. They need to exert pressure on the exchanges to stop giving advantages to high-frequency firms.


Part of the problem is that many of these firms haven’t been paying attention to the changes, and again I point to the speed with which they have taken place. But more are waking up – I hope in part because some of them have read my book.

Thank you, Scott, for explaining the realities of the market and for your feedback on what could be done to restore a transparent, open market. It sounds like traditional market heavy-weights--institutions, mutual funds and pension funds--will only regain a say by removing their participation (and liquidity) from the current stock market: exit equities and go on strike, so to speak, until the exchanges and the SEC ban high-frequency trading, outlaw front-running and restore real transparency.

If the traditional heavy-weights abandoned the market, that would leave only the HFT firms and the Federal Reserve's proxies in the market, poaching each other in an ever-tightening circle of parasitic predation.

Removing liquidity that can be skimmed would push the present market into a highly vulnerable instability. The resulting implosion would "clear the decks" for meaningful reform.

If the traditional heavy-weights foolishly continue providing the "dumb money" that's being skimmed, perhaps retail investors could start a small, limited exchange that banned HFT, front-running and all the other manipulations. Such a market could restore one of the market original purposes, raising capital for new enterprises, and enable small retail traders access to an unmanipulated market.

Here are some common-sense rules for such a "new market":

1. Every offer and bid will be left up for 15 minutes and cannot be withdrawn until 15 minutes has passed.

2. Every security--stock or option--must be held for a minimum of one hour.

3. Every trade must be placed by a human being.

4. No equivalent of the ES/E-Mini contract--the futures contract for the S&P 500--will be allowed. The E-Mini contract is the favorite tool of the Federal Reserve's proxies, the Plunge Protection Team and other offically sanctioned manipulators, as a relatively modest sum of money can buy a boatload of contracts that ramp up the market.

5. All bids, offers and trades will be transparently displayed in a form and media freely available to all traders with a standard PC and Internet connection.

6. Any violation of #3 will cause the trader and the firm he/she works for to be banned from trading on the exchange for life--one strike, you're out.

Is such a retail-trader friendly exchange possible? There would certainly be a nice profit in it, for everyone who is tired of providing liquidity for HFT firms would flee the existing exchanges in a New York minute.

Given a choice between listing on the pseudo-market or a legitimate albeit smaller exchange (it would be a binary choice, you can only list in one or the other), many small-cap and micro-cap companies would choose the unmanipulated exchange once liquidity and demand reached critical mass.


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Sat, 09/15/2012 - 20:59 | 2799595 Eally Ucked
Eally Ucked's picture

You're not missing anything my friend! Its simple, they don't like me and my idea so they gang up on me with their stupid options, with few cents on my dollar. If they dont like it let them much me $=$.  

Sat, 09/15/2012 - 14:08 | 2798886 Umh
Umh's picture

Try DRIPs; direct stock purchases from the companies.

Sat, 09/15/2012 - 09:44 | 2798385 koaj
koaj's picture

he acts as if the retail investor or smaller guy is ever getting back into the market

for the past 2+ years i have foresaken contributing to my ira, uni-k, and 529 plans to purchase hard physical silver

Sat, 09/15/2012 - 11:19 | 2798545 Tortuga
Tortuga's picture

Man, that's a lot of forsakin going on, you ought to make some time in there for foreplayin. If you have some stranded funds, ask a broker, I know, they make the rules, if you can roll over to a self directed plan that lets you buy a house or pm's. These are available, uncomfortable and not widely utilized. Just sayin, google "self directed IRA or 401k and start studying.

Sat, 09/15/2012 - 09:46 | 2798388 Kaiser Sousa
Kaiser Sousa's picture

ok, im done with Charles totally now...

when will mother fuckers understand that this rigged system needs to be abandoned and destroyed b4 there can ever b any hope of a just, free, and widespread beneficial economic landsacpe the all can porsper from....

no solution underpineed by debt based currencies and left n the hands of the elite and bought and paid for politicians will ever be anything other than what we have now....





Sat, 09/15/2012 - 11:15 | 2798538 Tortuga
Tortuga's picture

OK, I agree with most all of your sentiments EXCEPT

there are other exclamations one could use without talking about people's mom's.


Sat, 09/15/2012 - 09:53 | 2798400 youngman
youngman's picture

I would go for the longer time rule..but 15 minutes seems a little long ...3 minutes maybe ...also all trades should show up...transparency is off sheet markets...I want to get rid of the humans...they take care of themselves first..then their friends...then maybe you...I do not like "market makers"...

Sat, 09/15/2012 - 10:09 | 2798425 mayavision2012
mayavision2012's picture

Yeah, but it is ultimately humans who program the computers in the first place.  Tis a puzzlement.

Sat, 09/15/2012 - 11:14 | 2798537 Tortuga
Tortuga's picture



However, what cannot continue, will not.


Unsure of the timeline though! You know, like Nader and Casey.

Sat, 09/15/2012 - 12:34 | 2798648 Seer
Seer's picture

I was laughing at the morons who were "demanding" "paper trails" on voting.  Really, what keeps anyone from programming a fake printout?  Eventually folks figured out what I was saying and abandoned computer voting (not that that still does anything, but at least some might be understanding logic and how corrupt things are).

Sat, 09/15/2012 - 10:02 | 2798414 buzzsaw99
buzzsaw99's picture

1) pension funds sell all assets

2) pension go to pay-go from now on


the stock market is legalized rape of the middle class by the uber-wealthy

Sat, 09/15/2012 - 10:06 | 2798420 Seize Mars
Seize Mars's picture

So the solution to a tightly controlled, regulated and manipulated fleecing machine, is...more restrictions and rules?

Forget it.

The real answer is, there ought to be no participants who have "infintely deep pockets." In other words, no money-printing allowed!

Money, insofar that it represents a claim on labor and goods, can be thrown around foolishly by whomever, in whatever Formula 1 method they like. But if certain folks are allowed to create claims on paper assets, using other paper assets, then, well, we've got fleecing. Right?

In the intermediate term, I like Anne Barnhardt's solution which is only allow traditional open-outcry trading, like before.

Then, ban phoney money. It's not that complicated, fellas!


Sat, 09/15/2012 - 10:08 | 2798424 XtraBullish
XtraBullish's picture

What a stupid idea. It is far better to hold physical gold/silver and then a basket of low-cost producers of same held in your safety deposit box registered fully and AWAY from any bank or broker. That way you can simply sit back and watch them all cannibalize themselves. Watch the big artillery guns now train on the USD bigtime now that the Yanks have had their way with the Euro while the banksters sold all their bonds to the European funds. The world's largest debtor nation is about to feel the wrath of the forex gods for trying to run a government-approved-promoted Ponzi scheme with the future generations' cost of living. Pitchforks and torches in downtown Des Moines is going to shake things up bigtime, don't ya think?

Sat, 09/15/2012 - 10:32 | 2798458 NewWorldOrange
NewWorldOrange's picture

Agree, in general. I don't think have had time yet to fully digest the Fed's surrender to QEternity. Talking about a new stock market (LOL!) is like talking about rearranging the deck chairs on the Titanic AFTER it's hit the iceberg and it's half underwater. I normally wouldn't "criticize" an article without being specific -- I stated some "specifics" in a post below. A new stock market with new's like discussing what brand of bandaid to use on guy who's just had his arms, face, and everything below the waist blown off by a neutron bomb that lit him up with ten million becquerels.

Then again, I have a very rich fantasy life of my own and it does help pass the time while providing a little entertainment. Heh.

Sat, 09/15/2012 - 10:43 | 2798477 centerline
centerline's picture

I don't think CHS really puts forth much of what he writes like it is viable solution to what we have now.  I think (hope) he knows those ships sailed long ago.  Rather, it makes for interesting reading for the undertones of disgust and the juxtaposition of where we are versus were might should be.

Not sure either what this latest Fed really says.  It did catch me by surprise though.

Sat, 09/15/2012 - 11:06 | 2798519 NewWorldOrange
NewWorldOrange's picture

Well stated. Fantasy has it uses.

The Fed didn't catch me by surprise though. My view on all of that was framed not just by zh and the Hopium crowd but by the work of Patrick Byrne previously mentioned and other work in a similar vein for example "Currency Wars" by James Rickards. Once the Europeans threw that right hook last week and the so-called markets responded so positively toward it and the dollar began its slide, I believed Fed action was imminent. What surprised me, but shouldn't have, is that the European actions were deemed positive by so much of the "markets." THAT is almost unfathomable to me, and has me wondering if the "markets" are being controlled and manipulated in ways far more diabolical than any of us realize. It's as if the entire world is now being run by algos programmed to reverse natural, logical feedback mechanisms (which of course, cannot go on forever -- nature, to be commanded, must be obeyed. Eventually.)

Sat, 09/15/2012 - 11:12 | 2798535 Tortuga
Tortuga's picture

It's like the pundits and republicrat ho politicians hymmmmn and hawin over the latest poll when the polls have been hypothicated for EVER. Like they aren't as crooked as the SEC.

Sat, 09/15/2012 - 11:09 | 2798529 Tortuga
Tortuga's picture

Yea, I thought it was a set up from the git go when the ho politicians allowed captive 401k's. This stupid is slowly working it out though, around all the roadblocks, fees, penalties, thiefin, stealin, rehypothecatin etc....

Sat, 09/15/2012 - 10:11 | 2798426 MeetTozter
MeetTozter's picture

Stocks on EBay, IPO's on Amazon!

Sat, 09/15/2012 - 10:19 | 2798428 NewWorldOrange
NewWorldOrange's picture

It seems a lot of people would benefit from a thorough reading of the great work done by Patrick Byrne, CEO of, at his site, What he and his investigators did was in many ways comparable, but far more extensive, than what our "Tylers" have done in exposing market manipulation. In a nutshell, he proved beyond any doubt that there is a financial WAR going on today between numerous elements around the world. In particular, Bear-Stearns & Lehman were merely a culmination of events created intentionally by mostly foreign elements, many of whom are financiers of global terrorism, global arms traffickers, top people in certain regimes (Russia, Libya at the time, Abu Dhabi, others.)

A market with these rules sounds wonderful Tyler. In reality, it would be very, very easy prey, and would last all of about a week, if that. I'm no financial genius but even I can think of a few ways to easily fuck that idealistic vision of a stock market into the ground. The world has advanced more technologically in the last 10 years than in all of previous history. That will continue to accelerate, and the dangers will multiply quickly. The financial sphere is not immune and neither computers nor humans can avoid the enormous pitfalls any longer. It's all just a matter of time. The financial/monetary battles being fought RIGHT NOW between the central bankers, governments, wealthy individuals and other entities will not end well (the Fed's recent capitulation to QEternity was as much a parry of the Eurozone's own recent punch as anything else. The Bernank would prefer to keep EURO troubles in the headlines.)

It's a full spectrum fight to the death now, and mostly in cyberspace. Financially, militarily, informationally, economically, technologically, monetarily -- it's a mad dash to the finish and before it's all over with, there won't be a single human on the planet who has any clue whatsoever as to what the bots are doing, or what they can do, or what they will do, or how to bring them under human control. Skynet will not be as simple, logical, or as predictable as an Atari 9000.

Sat, 09/15/2012 - 10:25 | 2798452 centerline
centerline's picture

Thanks for the link NWO.  Will spend some time over there reading.  I have no doubt that this war has been going on for some time - is likely just an extension of the cold war and same tensions going back even further.  Technology and globalization just changed the nature of the conflict.  Things are noticeably accelerating now - at least to those who care to look cummulatively at what is going on around the world.

Sat, 09/15/2012 - 10:48 | 2798485 NewWorldOrange
NewWorldOrange's picture

It's getting awfully hard to keep up. I read and write about "this stuff" almost every minute I'm awake and have for about fifteen years, and I feel like it's all just flying right past me. There's the old Chinese curse, "May you live in interesting times." Well, the movie is playing out so fast it's hard to be interested anymore. I think I've grown sated. I spent the last three months partying and fucking, it got a little old, but after the last two weeks of reading/writing, Amsterdam suddenly looks really inviting again. And the crowds are disappearing now too;)

Sat, 09/15/2012 - 11:06 | 2798520 Tortuga
Tortuga's picture

I vaguely recall that, We were soldiers once, and young. Thanks for the vicarious memories.

Sat, 09/15/2012 - 11:33 | 2798565 Oh regional Indian
Oh regional Indian's picture

Where do you post what you write NWO? I'd like to read it.


Sat, 09/15/2012 - 12:27 | 2798633 centerline
centerline's picture

You've been at it much longer than I have then.  I fall into the category of having known for some 15 years or so that something was broken and getting worse each year, attacking lesser angles of it rather than trying to connect the dots - or following the money... now trying to play catch-up since about 2008.

It really is a wild ride.  Lots of ups and downs.  The incredible pace makes me second guess virtually every analysis and yet I still find myself in various biases without even realizing how I got there.  It often is a struggle to talk to people in my own profession about the future because I clearly can't say what I really think.

There are weeks now where I can't bring myself to stop reading and weeks where I really don't even want to know what is going on.

Good for you on the living large.  I have been doing some of the same myself.  And enjoying the incredible food supply chain while we still have it.




Sat, 09/15/2012 - 11:05 | 2798517 Tortuga
Tortuga's picture

Well, yea, who made all that money on 09-11-01? Not to mention all the crisp new foldin kind of US fiat coming out of N Korea, Russia, Iran, Venezuela.

Sat, 09/15/2012 - 12:45 | 2798678 Seer
Seer's picture

"merely a culmination of events created intentionally by mostly foreign elements,"

Don't be so quick to conclude this.  The US has the MOST power, and given that power corrupts, it therefore contains the most corruption.  The primary currents ARE set and controlled by the US: yeah, "foreign elements" also have power, but they can only alter the speed and volume of the current, but the path of the current runs on...

This gives a hint at the complexity of the connections:

Under the mask of the war on drugs

Sat, 09/15/2012 - 10:20 | 2798446 dwdollar
dwdollar's picture


This is like saying... "We need to elect leaders who put the nation before themselves."

Good luck.

Sat, 09/15/2012 - 12:55 | 2798708 Seer
Seer's picture

Nation?  As in Nation-State?

That's how They have managed to position themselves (and stay) in power!

Sat, 09/15/2012 - 13:26 | 2798787 falak pema
falak pema's picture

'Cos the American people have been asleep. DOn't give them more credit than they deserve.

SInce the 70s all civic movement and popular pressure on government has died. Americans have become a-politic. And they, the Oligarchs,  have benefitted from it. 

False Libertarian mantra has killed true liberal thinking in USA since the 1980s. Ask Paul Craig Roberts, father of Reaganomics and most outspoken opponent of America's moral decline into "corpo-fascism", his words not mine.

Sat, 09/15/2012 - 10:23 | 2798449 Stuck on Zero
Stuck on Zero's picture

You are missing one item.  All shares that are shorted must have the stock certificate serial number posted with the shorting price. That will eliminate naked shorting.


Sat, 09/15/2012 - 10:42 | 2798473 NewWorldOrange
NewWorldOrange's picture

Excellent point. NAKED short selling is the root of the financial battles that led to Lehman/Bear, as I alluded to in my post above regarding the work done by Patrick Byrne.

FYI, one Gary Weiss was an integral part of this (real) financial terrorist plot that led to the near collapse several years ago. He runs a website called "Seeking Alpha", and I have seen it recommended or lauded in a number of the same places where I see zh recommended. I've seen a number of comments here linking to his site. That troubles me. This Weiss character is a proven mobster and consummate liar, as well as a complete psychopath with strong links to the some of the worst scumbags that are well known personages on this site (as well as to plenty of international drug traffickers and terrorist financiers and arms traders.)  The guy and his wife (who forged resumes and credentials to get into the UN, before she was escorted out) are criminals and have been very aggressive in taking ownership of various Wikipedia articles, for example, the one on naked short selling (where Weiss described it as both non-existent and a useful market mechanism in the same breath.)

Sat, 09/15/2012 - 11:02 | 2798512 Tortuga
Tortuga's picture

Wow. I vote for U. to be new Chairman of SEC. 'Course, you should watch out sitting on park benches or walking across bridges should that happen.

Sat, 09/15/2012 - 10:34 | 2798453 CheapBastard
CheapBastard's picture




Old paradigm:house ownership;  30-yeard deblt;  accumulation of 'junk'


New paradigm: educating yourself; nimbleness;  renting;  deleveraging all that junk you have accumulated.

Sat, 09/15/2012 - 13:09 | 2798746 Seer
Seer's picture

Renting?  Promoting a rentier class?

Being a renter just means that there's likely someone else who is handing the money over to the bank.  And, if it were to come down to it you wouldn't be able to be take advantage of any scenario in which mortgage collection might cease prematurely.  Yeah, one could squat, but then you'd likely be playing catch up when the wheels finally fall off.

There really isn't any one-size-fits-all "solution" or "statement."  I rented for years in order to save enough fiat to plunk down on land that I could assume care of (mortgaged through a farm-based credit union): we are, after all, only ever custodians up until we die.

I'd change your "New paradigm" to read:

educating yourself; nimbleness;  owning productive assets;  deleveraging all that junk you have accumulated.

Sat, 09/15/2012 - 10:39 | 2798466 ZeroPower
ZeroPower's picture

3. Every trade must be placed by a human being.


Lol. Author is a fucking idiot. 

How about every time we want to buy something online, it must be done through a brick & mortar store instead? Ah, the convenience!!

Sat, 09/15/2012 - 10:59 | 2798507 Tortuga
Tortuga's picture

So, you think you are making the trade when you trade online. Just askin, I used to think that too.

Sat, 09/15/2012 - 11:00 | 2798509 ThorAss
ThorAss's picture

I think the intention of the author was that the originator of the trade was a human decision not a computer program running without human interference. Might be a moot point if the other rules are adopted including the fractional cent restriction I added.

Sat, 09/15/2012 - 10:40 | 2798469 Waterfallsparkles
Waterfallsparkles's picture

I still say the biggest problem is the Sub Penny trading.  This lets the HFT front run the best bid, sell by a fraction of a penny keeping anyone in line from getting a fill for their order.

Ban Sub Penny trading.

Sat, 09/15/2012 - 10:40 | 2798471 crawl
crawl's picture

Who today believes the US stock market is a reflection of fair and open trades occuring from equal access to information?   Bankers, FED and the PPT will not allow a honest alternative to the system that is in place.  They lose the power, the people gain it.  Good reading for fantasy, not reality.

Sat, 09/15/2012 - 10:43 | 2798476 boooyaaaah
boooyaaaah's picture

Lets try barter for a few years- I know a lot of shyters that will barter their way to the top

and then they will control us all.

For example baseball cards. Their was one kid who could shoot better than anyone. He glued 2 cards togher and it really made a difference. But soon as the word got around no one would shoot base ball cards with him

I think what Ben is witnessing is everyone is taking their cards home. But he keeps gluing more cards together and issuing more money to bankers. Thats what he does.

He would love to go back to the good ole days.

A Yogi Berra in the hand is better than 2 maybe in the school yard

The bigger fear or question is and I think Dalio was accurate & honest when he said deflation or depression. I think they know its getting real. And when he said that 1933 was the bottom, I think he is forgetting 1937.

But by that time Hitler, who he mentioned more than once was out to change the world system and the monetary system forever.

Then he mentions China, my question is, when does an imperfect economy (his words)  who is centralizing become convinced that the worlds system is stacked against them and they better do something about it.

He thinks that inflating the US dollar is one way to keep a balance. To keep save us from civil strife. I don't know for sure but China may see this differently.

Dalia says that what the Fed is doing is not creating currency but increasing credit and taking the role of what a healthy economy would be doing. And Maria was right on top of that when she said if we are on the border of a recession depression now how can we ever raise rates to prevent inflation caused by creating credit.

The Carter years had a term Stagflation stagnet growth with inflation.And Gold was highest just before Volker raised rates. I dont think the economy was growing when Volker raised rates. He raised rates at the bottom of stagnation. With unemployement at 7.9%. I think the under reported unemployment is much higher today

Year Inflation Unemployment (1) ------------------------------- 1961 1.0% 6.7% 1962 1.0 5.6 1963 1.3 5.6 1964 1.3 5.2 1965 1.6 4.5 < Vietnam war spending increases 1966 2.9 3.8 1967 3.1 3.8 1968 4.2 3.5 1969 5.5 3.5 1970 5.7 5.0 1971 4.4 6.0 1972 3.2 5.6 1973 6.2 4.9 1974 11.0 5.6 < First oil crisis 1975 9.1 8.5 1976 5.8 7.7 1977 6.5 7.1 1978 7.6 6.1 1979 11.3 5.9 < Second oil crisis 1980 13.5 7.2 1981 10.3 7.6 1982 6.2 9.7 1983 3.2 9.6 1984 4.3 7.5

Like Mark Faber said Ben has been doing this credit easing for years with no result .Much like Burns & Miller fed chairmen before Volcker.

In August of 79, 1 year before Reagan was elected in '80 Carter appointed Volcker.

Ps the Oil Crisis was the result of inflation and dollar devaluation -- But it crushed the economy --




Sat, 09/15/2012 - 10:58 | 2798501 Tortuga
Tortuga's picture

That man over at shadowstats says the real unemployment is plus 20%. That's a lot of pain and misery.

Sat, 09/15/2012 - 11:11 | 2798532 malikai
malikai's picture

...And he's just using the same unemployment calculations from the 60s/70s/80s.

Sat, 09/15/2012 - 13:20 | 2798769 Seer
Seer's picture

BUT... aren't we really talking about employment in TPTB's system?

I "employed" someone not too long ago to split some wood for me.  No one is recording those stats.

My point is that we should look to NOT jump back in their "employment" wagon, the wagon that They control.  Rather, we should just do what's necessary: although I thought Winston Churchill a pig, I do love his quote "Sometimes you have to do what is necessary."

Sat, 09/15/2012 - 10:44 | 2798479 Tortuga
Tortuga's picture

I agree with "poaching each other in an ever-tightening circle of parasitic predation." Can I use the etcpp acronymn man, that's some fine metaphoring. The bits and nano's kicked my ass so bad the last week it took me 4 hours, to use stops, aggie male cheerleader saq squeeze and 8 hail jaimies, to get it back and we're just talking trailer trash nickels and dimes that this twofisted beerdrinkin pickupdriving,clinger to faithanguns, teabagging,racist,ignorant, homophobic etc.... dipstick plays with.

"perhaps retail investors could start a small, limited exchange that banned HFT, front-running and all the other manipulations." Good idea, ain't gonna happen, sic.... alternate silver exchanges. Only 1 way for change to happen. We all know what that is and it'll hurt.

I dis agree with:

"held for 11 seconds": I read the other day that the hfts make 7-11 trades a nanosecond, which is 1 billionth of a second. Whew, that's a lot, the hfts "cognitively" read and understand what is happening with other parameters effecting the trade, adjust to the direction they want to go, then drive the market, in front of it, the way they have been told to. Amazing isn't it. No wonder retail has left the stock exchanges.

"the SEC has dropped the ball": they are not even in the game. they are bought and paid for ho's just like our lawlessmakers.

God Bless you for being an honest man and the USA and RICO the banksters, their ho politicians, past and present and IMPEACH the liar Eric Holder and the dumbass, Hillary.

Sat, 09/15/2012 - 12:30 | 2798644 grid-b-gone
grid-b-gone's picture

Stocks can still be traded by individuals where paper certificates still exist.

Ebay, Craig's list, and yard sales cover tangibles.

Family networks for loans already exist. Older family members who would otherwise get next-to-nothing on CDs can loan to others who would otherwise pay 7% for car loans and such.

What is not common yet, are larger networks where maybe 20 people kick in $5K each to provide a house loan for a young couple.

The general public has the ability not to play the modern rigged banking game. One poster above calls it "taking your cards home."

Sat, 09/15/2012 - 14:03 | 2798871 Cathartes Aura
Cathartes Aura's picture

thinking outside the box'd - I like it (and have done it for decades, ha)

while I'm not so sure about,

What is not common yet, are larger networks where maybe 20 people kick in $5K each to provide a house loan for a young couple.

for many reasons, including removing incentive, working towards a goal - I do understand the principle, it's like the community helping to build a home, barn raising, etc.

but check this out - there already exists many alternatives, but most have been applied to "3rd world" folks - since amrka is experiencing this meme in many places already, I wonder if "laws" prevent local people working with each other for stability?


Sat, 09/15/2012 - 10:46 | 2798483 ZeroAvatar
ZeroAvatar's picture

5. All bids, offers, and trades (transparent)


Retail investors have 'real-time' data, none of this 'quotes delayed 15 minutes crap'.

Sat, 09/15/2012 - 10:59 | 2798506 Bobbyrib
Bobbyrib's picture

Retail investors have 'real-time' data, none of this 'quotes delayed 15 minutes crap'.

You could get that now.



Sat, 09/15/2012 - 10:50 | 2798487 groundedkiwi
groundedkiwi's picture


we? Is this in the royal sense!. No We do not need a new anything, We need democracy without corptracy.

Sat, 09/15/2012 - 10:50 | 2798488 mberry8870
mberry8870's picture

Don't be an idiot. That would make things fair.

Sat, 09/15/2012 - 10:52 | 2798493 ThorAss
ThorAss's picture

You missed an obvious one. If anyone is allowed to bid fractional cents then all can.

Sat, 09/15/2012 - 10:58 | 2798503 Bobbyrib
Bobbyrib's picture

We don't need a stock market period. Let the market figure out how to solve the problems that are plaguing it. If no one invests, then the market will either have to adjust, or it will die. When you buy one share of a company (supposedly ownership) what does it guarantee you? Absolutely nothing. You aren't guaranteed profits from the company, dividends, and at this point any say in how the company is run. As a common shareholder, do you know where you stand in line for money if the company should go bust? Dead last. You own something that some other sucker may want to give you some money for, but nothing else.

If they were to reform the stock market they should guarantee that if a profit is made for a stock you own, you actually get a share of the profit (you know money made minus all the expenses). Sometimes that profit is paid in the form of a dividend with the current system, but not even that is guaranteed to be paid.

Also the government should allow for more investments for retirement funds. They could offer physical gold ownership where you don't have to pay someone to store the gold for you (and where if they go under the gold could be put into a general bankruptcy fund MF global style) and you take control of the assets. They could make it where you have to buy certified gold coins where the bar code number would be stored in the database of the IRS. Contributions would still be reported to the IRS as well. They could also allow the average citizen more access to real estate ownership in an IRA.

I think you all understand my point by now.


Sat, 09/15/2012 - 14:23 | 2798921 Umh
Umh's picture

"They could make it where you have to buy certified gold coins where the bar code number would be stored in the database of the IRS."

Barcodes on gold what a great way to expedite confiscation!

Sat, 09/15/2012 - 15:25 | 2799059 blunderdog
blunderdog's picture

We don't need electric light, either, if you think about it.  It does make possible some things that were previously impossible, tho.

Sat, 09/15/2012 - 11:03 | 2798515 jackinrichmond
jackinrichmond's picture

3A)  everyone should pay the same price to do a trade.

Sat, 09/15/2012 - 11:10 | 2798530 ThisIsBob
ThisIsBob's picture

The NYSE was just fined a whole 5 mil by the SEC for giving preferental data flow.  Now in the spirit of fairness they  insist that everybody in their machine room have the same length cable.

This should go a long way toward solving the problems.



Sat, 09/15/2012 - 14:31 | 2798941 Umh
Umh's picture

A thousand miles of cable each would level the playing field for the big players and HFTs, but it doesn't help the retail investor.

Sat, 09/15/2012 - 11:25 | 2798554 I should be working
I should be working's picture

Add to this:


No more "dark pools" and there should be limits on gapping stocks.  Trading should be halted on gaps into the new trading day the same way it is halted during abnormal spikes in volatility within a trading day.

I have seen way to many stocks gap down by excesive amounts that are not in line with the companies fundamentals.

Sat, 09/15/2012 - 11:35 | 2798568 elwu
elwu's picture

This rules make a lot of sense for the vast majority of people plus the real economy. So much so, that the parallel universe of the finance sector will make absolutely sure non of them will ever be implemented.

Sat, 09/15/2012 - 11:50 | 2798580 mewenz
mewenz's picture

Charles, really like your stuff normally, but think you really messed up on this one.  HFT is simply about being the first in line to steal from someone attempting to invest their money.  They are gutting and building entire buildings / digging underground etc. just to race each other to do so.  At some point, the "takers" run up against constraints such as the speed of light and that they have or will drive away those who they are stealing from.  Not at all saying this can't or should not be fixed, but the proposed solution is just, to be kind, not good at all.  15 minute bid / asks and 1 hour required, a brand new industry will spring up overnight to feast on that...just a matter of reprogramming!

Sat, 09/15/2012 - 11:59 | 2798587 falak pema
falak pema's picture

How do you get a new market when 80% of the trades are SLAVES to the old logic of crony capitalism; where the derivative off- balance sheet status is more than compromised;making all lateral movements to a new paradigm impossible.

Caesar is prisoner in his palace and so is his Praetorian Guard of WS legions. The Oligarchs DONT want an alternate market; and the people do not have the power and resources to dent the present fiat firewall. There will be blowback resistance to such pressure. 

THe current market has to be burnt down to liberate the power of the entrepreneurs from being forced to look into the abyss of phoney funny money FED Religion; where the MEDIA sirens sing to the glory of past traditions pointing to an ever onward WS stock levitation, extolled as Capitalist dogma poured in concrete. In point of fact the false premises of  Pax Americana IMPERATIVES spawned by its leaders who sold the country down the river to the Gods of fiat falsification, Globalisation and MIC/oil hegemony. 

Sat, 09/15/2012 - 12:04 | 2798598 grid-b-gone
grid-b-gone's picture

I would not support a system that limits day traders. As long as a bid is a valid offer to buy, and a sell order is made by someone who actually has shares to sell, that is a market.

Even at a live auction, winning bidders are sometimes approached to immediately resell won items. The duration of holding should not be an issue as long as the buy or sell order is placed manually by a human.

Public visibility would be a great improvement. Today, only insiders have this advantage.

I see some validity for government intervention during times of panic, but they should not help inflate a market. When the S&P fell to 740 in the fall of 2008 it may have been appropriate to announce federal support buying at 700 or 650 to limit fear selling. Four years later, it would be nice to know that the market level is a true representation of the balance of buyers and sellers.

Today's true market is probably at 1,200 - 1,300. One reason retail is not a strong buyer above 1,400 is because people know they are paying (over-paying) a "Fed premium" that can be removed at any time.

Why would a long-term buyer invest at this level? The longer one expects to hold a stock, the more likely they will hold when the Fed premium is removed.

Every buyer in a propped-up market is more likely to become an eventual bagholder.



Sat, 09/15/2012 - 14:30 | 2798925 boiltherich
boiltherich's picture

I would agree with your post except for the part about a government role in slowing or stopping panics. What is to prevent the Fed or PPT from simply saying if the market does not go up by a given percent per day/week/month/year there will be a panic and so we have the right and duty to make sure valuations are distorted upward till nobody can properly value a share of equity. In fact that is just what they have been doing for years now.

Panics are not fun if you are too dense to unload your shares before they happen and you have to ride it out or take a capital loss on your portfolio, but they are also market clearing devices without which the market cannot be fairly valued.

Part of the reason I will not own equities is that risks must = return, that is a good thing. The concept of these risk/reward shares got started with ship owners in Venice at the end of the dark ages, it was a big part of what ended the dark ages and kicked off the Renaissance, but capital market risks now have been so distorted I simply cannot know what a proper return is and the buy sell signals are all static now, fundamental analysis is useless because of balance sheet bologna and FASB accounting frauds, technical analysis can offer some short-term guidance but they too are manipulated and distorted to the point I am sure not betting my hard earned farm on them, all signals are buried under the cacophony of white noise generated by the HFT and Algo trades.  Panics are essential human behavior and one of the most profound risks to markets, they are integral to the function of the market even if you really hate them.  The simple conclusion is that if you do not think that the risk of market panic is worth the price of the shares then you will just tell the seller he has overpriced his offer and you are not interested, nobody is making you buy into an overpriced exchange.

This is the prediction of Marx when he said capitalism will destroy itself, no need for the commies to do it from the outside, the banksters are doing it from within.

Sat, 09/15/2012 - 12:25 | 2798628 Yellowhoard
Yellowhoard's picture

Imagine there's no ES/E mini contract, it's easy if you try.

Sat, 09/15/2012 - 14:36 | 2798952 Umh
Umh's picture

Ignorance is rarely useful, unless it calms nerves or something.

Sat, 09/15/2012 - 12:50 | 2798689 f16hoser
f16hoser's picture

We Need a New Stock Market: "Then how would US Politicians make their millions on a 175K annual salary if we change WS?"

Sat, 09/15/2012 - 12:58 | 2798715 Tombstone
Tombstone's picture

We need a new government first and foremost.  Not the statist-centrally planned government of today, nor the RINO led government of uncontrolled spending.  But a government, mostly unnoticed, as our forefathers envisioned.  We are witnessing first hand the power and corruption of a government gone berserk.  Is there anything or anyone in Washington that can be trusted anymore?

Sat, 09/15/2012 - 13:35 | 2798823 Seer
Seer's picture

Perhaps YOU need a "leader," I don't.

Only govt that should exist is one in which people can walk in to the office of ANYONE who is a "representative."  And by "walk in to" I mean that literally (none of this "flying to DC" shit).  This means, by default, ONLY LOCAL GOVT, chosen by LOCALS (no outside money or votes).

Sat, 09/15/2012 - 15:54 | 2799096 zerozulu
zerozulu's picture

We need new money. A dollar bill with a 24 carat GOLD thread in it worth $1.00. and a $5.00 bill with a $5.00 worth Gold in it and same for other denominations. No more this fucken Ctrl-P confetti.

Sat, 09/15/2012 - 13:04 | 2798728 Duke of Con Dao
Duke of Con Dao's picture

YouTube - Tower of Babel? You didn't build that!

'Some other Biblical Jew made that happpen!

YouTube - "You Didn't Build That Frankenstein!' sez President Obama

'Someone else re-animated that dead flesh.'

YouTube - 'Nazi Party? Adolf Hitler... You Didn't Build That!' sez President Obama 

'Some other Hitler made that happen.'

YouTube - 'Obi-Wan Kenobi... You Didn't Build!' sez President Obama 

Some other twisted Jedi knight made that happen!

Sat, 09/15/2012 - 13:07 | 2798732 Fred Garvin
Fred Garvin's picture

The market needs long term investors, not ultra short-term speculators

Just adjust Captital Gains tax as follows:

Held over 1 year-10%

Held 30 days to one year-20%

Held 24 hours to 30 days-40%

Held 1 hour to 24 hours-75%

Held under an hour-95%

Sat, 09/15/2012 - 13:38 | 2798832 Seer
Seer's picture

I up-arrowed you because I think that this is more reasonable approach.  But... I'd be afraid that it would still trap small folk.

The whole growth-as-the-only-goal premise is running upon the rocks...  BIG will extinguish itself.

Sat, 09/15/2012 - 13:59 | 2798796 boiltherich
boiltherich's picture

How about we also make every share purchase a matter of public record with no fees to find out the names of the parties to a given transaction.  That would have been a laborious near impossible burden prior to the computer age but even then 5% ownership of a company is still public domain on EDGAR or was when I got my NASDQ licenses.  And I want to see an individual persons name not some holding company in the Cayman Islands, or a trust consisting of a half dozen law firms, one person that takes legal responsibility for the trades so that we have a human to toss into jail if it turns out to be fraudulent like money laundering. 

The essence of PUBLIC companies, and a PUBLICLY traded stock market is you know who is buying and selling, who is on the board of directors, and they must disclose major holders of shares, that is a right exists to know who you are co owner, or potentially a co owner of a company with. 

When I sat for my NASDQ tests it was illegal to "churn" a clients accounts, that is buying and selling to generate excessive sales commissions, and this was primarily for the benefit of the client, but it also serve the wider market in share price stability, that is why tens or hundreds of millions of shares traded on a typical volume day rather than the billions of shares traded daily in the modern market. 

I had gotten a job as a financial analyst where I no longer needed my NASDQ licenses so I let them lapse in 1999 or 2000, but even then I considered equity markets too corrupted and manipulated to invest in.  With the coming of FINRA and "self regulation" I would not wipe my ass with a share of stock, there is no way to properly value a stock anymore.  Their motto on their website says Investor Protection, Market Integrity.  Right.  As scandal after scandal is exposed when will people simply decide that the risk is in no way being compensated fairly by the returns?  I will never "invest" in equities till a powerful and independent regulator is returned to the markets and the rules posted here are enforced in a transparent marketplace.  I do not care if Benny B prints money till the presses smoke and pours all of it into the Dow or S&P I will not own stocks till I know I have an equal share of the risks and returns.

Sat, 09/15/2012 - 13:34 | 2798817 Confundido
Confundido's picture

No need to regulate or prohibit. You should start you own stock exchange offering those conditions and marketing it to people, telling them to demand their pension fund managers to only trade in your stock exchange, subsequent to which, you launch a class action against the incumbent exchanges on charges of fraud.

Sat, 09/15/2012 - 13:54 | 2798853 barroter
barroter's picture

Transparency? How will the scumbag fuck thieves make any money?

Sat, 09/15/2012 - 14:10 | 2798889 shitting_alpha
shitting_alpha's picture

if by common-sense, you mean idiotic, then yes.


slowing down the markets isn't going to help retail investors, because retail investors make terrible decisions at any speed.  all you anti-HFT crybabies need to grow up and admit that you're 1.  jealous, and 2. guessing.


two tips on how to make money trading / investing:

-  remove "should" from your vocabulary

-  consider why someone might actually want to be on the other side of your potentially dumb-ass trade

Sat, 09/15/2012 - 14:36 | 2798953 debtor of last ...
debtor of last resort's picture

Why not pick up a spade and dig out the copper yourself, instead of trading it a hundred times more than is fysical available. You shouldn't own it when you don't hold it.

Sat, 09/15/2012 - 14:39 | 2798957 Bartanist
Bartanist's picture

The market is performing perfectly as designed. It is after all a control mechanism and NOT a method for capital formation and investment. To assume otherwise is delusional. Why mess with perfection?

However, I would like the market to be a method of capital formation and investment (as we were all mislead to believe) and in doing so, I would add that there should be NO GUARANTEE OF LIQUIDITY! Price discovery must be real and if there are no buyer or sellers at the current price then "that is the market".

Oh, and absolutely ALL Shares must be delivered in the name of the purchaser and cannot be held in the name of the DTCC or some other Fed owned entity. Only owners may lend their shares out for short sales and NOT the brokerage houses or the DTCC... as is currently the practice.

As for short sales, I am split. Currently every short sale creates a new phantom share of stock which dilutes the value of the real share of stock. But this is primarily because the owners (excuse me, "beneficiaries" by today's laws) of the stock do not know their shares are being lent out and fully believe they have the right to vote their shares, even though their broker gave it to someone else so that they could sell it to someone who then also thinks they can vote the same share of stock. Maybe shorting has a purpose, but maybe not.

Sat, 09/15/2012 - 14:41 | 2798968 blunderdog
blunderdog's picture

Blah blah blah.

The FIRST STEP is always for the junkie to admit he has a problem.

The "market makers" won't admit they have a problem for another decade at least.

Throw this in the freezer 'til then.

Sat, 09/15/2012 - 15:34 | 2799070 Joebloinvestor
Joebloinvestor's picture

Algos battling algos and the cure is to insert a delay or human inbetween?

I don't think that is gonna work......

Sat, 09/15/2012 - 16:48 | 2799193 All Out Of Bubblegum
All Out Of Bubblegum's picture

Fuck the stock market. I've done better in the past year and a half with bitcoin than the people playing with the Sucker's Exchange. 

You old farts will catch on soon.

Sat, 09/15/2012 - 17:29 | 2799289 bilejones
bilejones's picture

There are no markets in the US anymore, merely wealth transfer mechanisms.

Here's a hint.

They are not transfering the wealth to you

Sat, 09/15/2012 - 18:01 | 2799343 Heroic Couplet
Heroic Couplet's picture

If 49 states function without a stock market at all, why does New York state need one? Limit New York City to credit unions only for the next century. You have to live within walking distance of your credit union.

Sat, 09/15/2012 - 19:49 | 2799486 sink critically
sink critically's picture

We've already sown the seeds of the new market for raising capital, crowdfunding. Add a little water in the form of ownership, voucher, or coupon certificates and a little sunlight in the form of open accounting practices and we are there.

Sat, 09/15/2012 - 23:09 | 2799826 bilejones
bilejones's picture

The thing that's mising here is the treatment of shorts.


Rule one should be the recognition that naked shorts are counterfeiting:


No naked shorts.


Sun, 09/16/2012 - 00:37 | 2799930 exartizo
exartizo's picture




The stock market shall not levitate of itself


Banksters shall not possess their own heads, literally, or figuratively.


A conviction of Greed on the part of any financial services employee shall be punishable by death.


A conviction of Greed on the part of any government employee shall be punishable by death.


A conviction of Corruption on the part of any financial services employee shall be punishable by death.


A conviction of Corruption on the part of any government employee shall be punishable by death.


The Financial Services Industry shall not possess any lobbying groups to the United States government.


The Federal Reserve has been determined to be an Unconstitutional Entity and shall not be reinstated.

Sun, 09/16/2012 - 01:21 | 2799971 ECE
ECE's picture

Grow the fuck up idiots of the delivery method! 

Author has obviously Lost big money and has to pass his failure to manage and grow assets onto those evil non traditional science fiction vodo siccience   Lets all by EQUITIES for 50 years until your all dead approach.    good luck with that nonsense!



Sun, 09/16/2012 - 01:48 | 2800001 Radical Marijuana
Radical Marijuana's picture

There are all stacked up Catch 22 double-bind paradoxes around the dark side of the moon and back!

The original definition of Catch 22 in the book was that "they can do anything that you can not stop them from doing" because "they" say they can, and you can not stop them.

The more general meaning of a double-bind paradox is the impossiblity of succeeding, when success to do A requires first B, but success to do B requires first A.

The central core, lynch pin, and keystone to it all is the funding of politics. Therefore, IF you can fix that problem, then you could fix the real politics enough to implement lots of the other solutions. However, fixing THAT problem first is practically impossible, because the political processes to fix the runaway corruption of the political processes can NOT be done without fixing THAT FIRST.

After working on THAT for several decades, I have effectively been forced to give up, not that I have stopped trying, but rather, it is simply not possible!!! Nobody has come up with a solution since Plato wrote down the question of "Who will guard the guardians?"

It is EASY to dream up a long list of things that we should do, like the list in this article, of practical ways to stop the increasingly fast, automated HFT frauds from cutting humans out of the loop of the economics that determines whether they can afford to pay for food or fuel!

& I could go on for a long, long time with that kind of idealistic bla, bla, blah. All one has to do is recognize that we live in a Bizarro Mirror World, because it is controlled by the Fraud Kings (ELECTRONIC FRAUDS, BACKED BY ATOMIC BOMBS), and therefore, virtually everything is backwards, and therefore, a list of things to fix is mostly just a list of doing almost everything one can think of the opposite to the way it is being done now ...

However, back to Catch 22 double-bind paradoxes, spiralling on down through its infinite tunnel, the ONLY way to defeat lies backed up with violence is better lies backed up with violence. However, in that case, the basic CONCEPT of lies backed by violence still prevails, while the only thing that changes is WHO is the best at the deceits that are actually running the money/murder systems.

The only philosophical way that I am remotely aware of to deal with these paradoxes is to reverse the fundamental dishotomies that defined them in the first place. One must go THROUGH the looking glass, of our Bizarro Mirror World Fun House "reality," which then becomes the most sublime of all the idealistic bla, bla, blah.

Sun, 09/16/2012 - 09:52 | 2800302 lostcause
lostcause's picture

 How about taking delivery on commidities. I guarantee the prices on commodities would come down if people only bought those they plan to take delivery on. 

Sun, 09/16/2012 - 14:07 | 2800789 Joebloinvestor
Joebloinvestor's picture

Change rule #6 to:

1st offense, "sterilization". (HAHAHAHA)

2nd time, DEATH.

Sun, 09/16/2012 - 15:14 | 2800957 mt paul
mt paul's picture

number 7 to the list.....


ever trader gets a free lolipop

with every completed trade ...

Sun, 09/16/2012 - 15:17 | 2800970 mt paul
mt paul's picture

every trade should be taxed also..


cut down on volume of HFT"s

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