Kudos to Sen. Edward Kaufman for asking securities regulators to take a comprehensive look at the impact of high-frequency trading and related super-fast trading strategies on the markets.
A few months ago, not many outside of the quant world were talking about high-frequency trading. But these days every one is talking about all the profits a select group of Wall Street firms and hedge funds area making from super-fast, entirely automated algorithmic trading.
Judge Jed Rakoff’s courtroom at the federal district court in Manhattan will turn into a people’s court of sorts as he looks to get to the bottom of the paltry $33 million Bank of America settlement with the SEC, which was looking into whether the bank misled shareholders about bonuses paid to Merrill Lynch employees.
Michael Durbin is no Wall Street rebel. But Durbin, who has been on the front lines of
high-frequency trading (HFT) since its early days, isn’t afraid to buck the industry line that lightning-fast trading of stock, options and commodities poses little or no risk to the stability of the markets.
There’s an old joke in New York that the most dangerous place is the space between a TV camera and Sen. Chuck Schumer. And the New York Democrat’s love of the limelight certainly was on display late last week with regards to the increasingly controversial subject of high frequency trading.
Maybe someday the Securities and Exchange Commission will figure out what to do when it gets a credible tip about potential wrongdoing. But judging by the agency’s handling of a recent investor complaint, the nation’s top securities cop has a long way to go.