Book guaranteed to raise Keith's blood pressure

[William Thornton]

[KeithE]

[William Thornton]

That gummit regs caused the rigged system, indirectly of course, is Lewis' assertion. It's technical and a bit difficult to grasp.

I remember reading a Kennedy bio that said Joe Kennedy was a part of the stock schemes common in his day. So there's nothing new here other than the new schemes.

There is so much money that churns through the markets that the very tiny margins of the HFT traders on each transaction, pennies, amounted to billions, sort of like a tax on the yahoos that weren't as smart as the flash boys. The HFT guys would probably buy yachts, houses, and planes with their dough so ordinary people would benefit. Gummit would waste the tax revenue on duck penii studies benefitting pointy headed profs.

[KeithE]

[William Thornton]

Let's allow for humor before we conclude cynicism. Duck penii may be quite the route to more federal funding for all I know.

[KeithE]

[William Thornton]

[KeithE]

[William Thornton]

Keith, get the book and read it.

Regulation National Market System, NMS for short

Lewis says, "...Reg NMS was well-meaning and sensible...however, [it] contained a loophole...[and] institutionalized a more pernicious inequality. A small class of insiders with the resources to create speed were now allowed to preview the market and trad on what they had seen."

Sort of like one poker player at the table who could afford a set of glasses that permitted him to see the other player's cards.

The book isn't indexed but this is the most salient set of quotes I can find quickly.

I don't know if Reg NMS was changed since then. I don't recall Lewis saying so.

My default position is that there will always be well-intentioned regulators who will be outsmarted by private citizens who have enough profit incentive. Like gummit control on compensation, taxation, etc. Those with resources will be able to outsmart the regulators. This is not to say that there should be no gummit regluations to create a level playing field, only that when we see gummit in action, it is slow, always reacting, seldom efficient and effective.

I'd be interested in your view after you read the book. I thought it was a very interesting read.

[William Thornton]

BTW, I didn't see the 60 Minutes piece so I don't know exactly how they handled this but if they left out what I quote above purposefully, that would be a case of media not telling all that needs to be told. Since the book is a 2014 book, maybe Lewis uncovered and asserted that part after the piece. I don't know. I wouldn't put it past 60M to slant a story.

[KeithE]

[KeithE]

[William Thornton]

Seems to me that the author thought Reg NMS to be a key to the HFT business, since there is considerable reference to it. The book isn't indexed so I can't go back and chase them all down.

After you read the book, we can discuss it better. I'll warn you - the book is graphless, but don't let that sour you on it.

[KeithE]

No matter what computerized system is in play, the prime reason for the gaming of the system lies in the greediness of those who are doing the HFT. It is robbery. Your incessant blame game on “gummit regs”, colors your reasoning. Can you at least assign some blame to the HFTs and those who funded this scheme?

[William Thornton]