U.S. Stock Market Rigged?
I saw this on CBS 60 Minutes Sunday and thought it was absolutely fascinating. I love how Brad Katsuyama became curious and did some investigating and got to the truth! I love people who break the mold, question things and explore like this.
Does what Brad uncovered surprise you?
Excellent video! I’ve been aware of high speed cable and its use in the stock market for years. I even heard reports about the cable from here (Chicago) to New York that saved 0.03 seconds. But this is the very first I’ve heard about *why* someone really spent all that money to save 0.03 seconds.
Yes, I absolutely love when stuff like this comes out, and people expose the bad guys (and gals) for who they are – and then turn around and do the right thing. Very inspiring story 🙂
Thanks for sharing it 🙂
This has actually been known for years.
I had once sold 200 shares of a lightly traded ETF and despite having made moeny on the trade, I put in my sell order “at market” and all of a sudden, the value of the ETF dropped 2% upon execution. I had live BATS data from freestockcharts.com (they are more updated than my crappy broker) but this was back when I did daytrading and it made me really suspicious of people front runing my trade. I have not had this problem with more liquid markets and stocks.
I have heard of others complaining to their broker over similar price drops upon selling and having the transcaction costs refunded or other solutions.
I still remember the investment banker I drove as a chauffeur years ago before the collapse who told me that the stock market wasn’t designed for people like me, it was designed to make people like him rich, and if I wanted to make money on it, I shouldn’t invest myself, I should just go to work investing other people’s money so I would get paid no matter what.
It was quite a few years ago when I realized the role that latency plays in the financial markets, but I had never sat down and done any thinking about exactly how it could be exploited or used– I only knew at an instinctual level that it was one place where you could manipulate and essentially rob any market with impunity.
Latency IS the financial market today and I’m pretty sure that it has been for several years now. I have to think that surely it became the name of the game by at least the late 90s, because if this didn’t happen until the mid-2000s then the financial markets are staffed with complete idiots who couldn’t find their way out of an open paper bag.