June 21, 2012
Copyrighted material redacted. Author cites:
http://www.huffingtonpost.com/2012/06/20/high-frequency-trading-commodity-futures-trading-commission_n_1613078.html
there is a cheetah in czechoslovakia that is a MAJOR participant in the futures, etc. market. there is no stock market in czechoslovakia, so this cheetah is largely operating in an unregulated environment that is trading in the united states. the CFTC is coming out with a rule very soon about high frequency trading. the HFT/high frequency trading is killing the US equity (and other trading venues) market because it sucks up demand and this is why the market trends downward. institutional buyers can go to the dark pools and alternative trading venues to buy and sell because they are tired of the shortsellers and HFT controlling the prices in the market. If your portfolio is trending downward, know that your equity is going to the cheetahs every day, by the consent of your brokers and the exchanges.
Copyrighted material redacted. Author cites:
http://www.securitiestechnologymonitor.com/news/omalia-algos-to-surveill-algos-cftc-30788-1.html
http://www.securitiestechnologymonitor.com/news/large-blocks-dead-not-liquidnet-30777-1.html
institutions can trade without the proprietary trading, shortselling and high frequency trading. retail investors are stuck trading in markets where those entities are present. while there are many studies about how these things do not harm the market, apparently the institutions disagree. retail investors also disagree but cannot opt out of the venues where these entities trade against them. and see that the size of trades in the other markets is about the same. this means that shortsellers, proprietary traders and high frequency trades can put up significant size in order to control price, drive the price downward. every day, retail investors lose $. the regulators need to act.