Just 15 years ago, security trading took place on a handful of not-for-profit exchanges deemed necessary utilities in support of free and transparent markets all over the world. For their best efforts, the exchanges were immune from liability and regulated by federal agencies.
Since then as forbearance for financial abusers spread, the exchanges morphed into public offerings of for-profit companies still indefensibly cloaked with legal immunity. This has been a disaster for financial integrity and stability. Like bailed-out banks, exchanges have been allowed to exploit profits without the sober balance of risk and accountability. They have become reckless monsters in the process.
Today there are 40 exchanges and alternative trading systems in the US alone enabling a fragmented mosh pit of wild-west skimming, front-running and unfair advantage purchased by a few trading firms and their executives ( ie., Citadel, Virtu Financial and KCG et al). At the same time, most traditional brokers have opted to hitch on to the gravy train by selling their client orders (trust) to be abused by the highest HFT bidder–best interests of the clients be damned. Policymakers meanwhile have overlooked all before slipping out the back door of government agencies to take plum gigs with the biggest offenders (to wit: Bernanke took at gig with Citadel on leaving the Fed).
The cozy club of cheaters have become grotesquely enriched in the process, enabling them to fund their own powerful lobby group Modern Markets Initiative dedicated to continually queering policy at the expense of legitimate investor interests everywhere.
In order for rigged markets to be broken up, people have to understand what is happening and demand action. Most who understand the system are profiting from it and not about to complain. But a few have been working tirelessly to spread enlightenment.
Read: This man wants to upend the world of high frequency trading.
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