Thursday, May 13, 2010
Sunday, May 9, 2010
Regulators have got to start to recognize that traders are not investors and vice versa and treat them differently. Different regulations. Different tax structure. Different oversight. Individual investors and the funds that just invest in stocks and bonds are not going to crash the market. Big traders who are always leveraging up and maximizing the number of trades/hacks they make will always put the system at risk. We need to recognize that they do not serve much of a purpose other than to add substantial risk to the global economy. That their stated value add of liquidity does not compensate the US and World Economy nearly enough for the risk of collapse they introduce into the system.
Wall Street as a whole needs to be in the business of creating capital for companies and selling shares to investors who believe they are shareholders. The Government needs to create incentives for this business and extract compensation from the traders/hackers for the systemic failure level of risk they introduce.
Friday, May 7, 2010
"How have we incented algorithmic traders and high-frequency traders to enter our markets in times of stress? We really haven't."
What, if anything perpetuated the selloff? And did so in seconds? There's a lot of speculation about high-frequency traders vanishing from the marketplace. The consensus is that high-frequency guys didn't provide the liquidity and that's what allowed for prices like one penny on Accenture.