Two issues emerged from a congressional hearing on the volatile trading of GameStop Corp. shares: Lawmakers and regulators need a greater understanding of how technology helped foster the frenzy, and regulators need systems to understand such events — and possibly to manage them.
House Financial Services members and witnesses spent most of their time at the hearing last week focusing on the role of short-selling in the GameStop trading frenzy in January. They specifically looked at the source of securities used to take short positions, and they looked at how a bunch of retail investors seemingly were able to outmaneuver the professionals. Continue reading “Article: GameStop hearing targets stock lending, social media”
Broken Markets: How High Frequency Trading and Predatory Practices on Wall Street Are Destroying Investor Confidence and Your Portfolio
Sal Arnuk is partner, cofounder, and co-head of equity trading of Themis Trading, LLC, a leading independent agency brokerage firm that trades equities for institutional money managers and hedge funds. Arnuk has extensive experience in equities trading and is an expert in electronic trading and market structure. Prior to founding Themis in 2002, he was with Instinet Corporation, where he headed the team responsible for equity sales and trading for institutional money managers, for more than 10 years.
• Why retail investors are pulling their money out of stocks in unprecedented amounts
• How decades of regulation created the broken markets we have today
• Why there are more than 40 exchanges, sub-exchanges, and dark pools rife with conflicts of interest where stocks are traded today
• How the stock exchanges became for-profit companies and fundamentally changed market structure
• Why the Flash Crash happened―and why it will happen again
• How there are two markets―the fast, accurate one that high frequency traders see and the slower one that retail and institutional investors see
Mary L. Schapiro took over a discredited SEC in early 2009 and vowed to rebuild it.
She promised tougher enforcement — “war without quarter” on financial fraud. Modernized rules to keep up with Wall Street. And a new, more effective organization.
Her tenure at the federal agency responsible for protecting investors and policing markets offers a Washington lesson: Even when epic crises create a sense of urgency, it is tough to tighten the reins on powerful industries. Dramatic results can prove elusive.