Thursday, June 21, 2018
Business

Latest tale of rigging stock markets is call to reforge tougher rules

The U.S. stock markets, the most iconic in global capitalism, are rigged. This time, the culprits are a combination of the stock exchanges, big Wall Street banks and high-frequency traders.

That, in a nutshell, is the premise and warning in a new book detailing how the fix is in on America's stock exchanges, the ones that transact and value vast sums of everyday people's pensions, 401(k)s, the worth of public companies and investments.

"The insiders," bestselling financial author Michael Lewis told CBS TV's 60 Minutes on Sunday, "are able to move faster than you and play it against orders in ways you don't understand."

The result? Stock market traders who use super-fast telecommunications systems can see what stocks you are about to buy or sell. They can then leverage that information to quickly execute their own trades before your orders even reach the market.

That millisecond difference in transaction time, says Lewis, lets high-speed traders buy a stock at the other exchanges and sell it back to a traditional stock buyer at a higher price. Multiply that small edge by thousands if not millions of trades, and the gaming of the stock markets is complete.

They win. We lose.

The new book by Lewis, Flash Boys: A Wall Street Revolt, hit stores Monday. And while general complaints about high-speed or high-frequency trading have been aired for years, Flash Boys details specifics about how certain stock traders spent hundreds of millions of dollars to build a faster telecommunications system to exploit mainstream stock market trades. The book's heroes are straight shooters who figured out this scam and tried to level the playing field for stock trades.

Lewis boasts a range of books exploring U.S. culture and finances. His Liar's Poker related time spent among Wall Street bond salesmen in the freewheeling 1980s. Moneyball told how the small-payroll Oakland Athletics tapped smarter baseball statistics to pick affordable players and stay competitive — as the Tampa Bay Rays do now. The Big Short revealed how Wall Street fed the U.S. housing and credit bubble, deepening the last recession.

Flash Boys warns us that the difference between market innovation and cheating is a growing gray area that the feds seem clueless to oversee.

Don't feel foolish learning part of your investing return was skimmed by high-speed traders. As Lewis writes: "The most sophisticated investors didn't know what was going on in their own market. Not the big mutual funds, Fidelity and Vanguard. Not the big money-management firms like T. Rowe Price and Capital Group. Not even the most sophisticated hedge funds."

Critics will claim markets have been rigged all along, and high-speed trading is old news in scamming investors.

But if investors and investment firms are getting fleeced, even by milliseconds, it's time sleepy regulators reforge and enforce the same rules for all.

Robert Trigaux can be reached at [email protected]

Comments
Former employee sued by Tesla says he was a whistleblower

Former employee sued by Tesla says he was a whistleblower

Tesla sued a former employee Wednesday, accusing the man of hacking the automaker’s computer systems and stealing company secrets, shedding light on what chief Elon Musk had suggested was the work of a secretive internal saboteur.But the employee, Ma...
Updated: 1 hour ago
Orlando airport first to scan faces of U.S. citizens on international flights

Orlando airport first to scan faces of U.S. citizens on international flights

ORLANDO — Florida’s busiest airport is becoming the first in the nation to require a face scan of passengers on all arriving and departing international flights, including U.S. citizens, according to officials there. The expected announcement Thursda...
Updated: 2 hours ago
Days after buying Time Warner, AT&T launches new TV service

Days after buying Time Warner, AT&T launches new TV service

NEW YORK — AT&T is launching a new streaming service incorporating television networks from the Time Warner company it just bought. The WatchTV service, a cable-like package of more than 30 TV channels delivered over the internet, is an example of th...
Updated: 2 hours ago
Tampa tech firm Newgentek hiring 20 following expansion

Tampa tech firm Newgentek hiring 20 following expansion

TAMPA — Information technology company Newgentek plans to hire 20 new employees over the next two years following an expansion of its Tampa headquarters."In the last 90 days, the Newgentek team has grown 24 percent and is now operating at 80 percent ...
Published: 06/21/18
A tight supply cuts into Tampa Bay home sales while prices keep rising

A tight supply cuts into Tampa Bay home sales while prices keep rising

Tampa Bay’s two largest counties showed anemic home sales in May as prices continued to rise due to a tight supply. In Pinellas, sales of single-family home plunged nearly 12 percent from the previous May, the second-worst showing in a year. P...
Updated: 4 hours ago
Could Lucky’s Market move in to Clearwater’s old Albertsons?

Could Lucky’s Market move in to Clearwater’s old Albertsons?

Lucky’s Market is considering a move in to the old Albertsons box space in Clearwater, according to preliminary plans filed with the city. Lucky’s master broker, Rick Lewellyn, was listed on an agenda as discussing renovating the existing property wi...
Updated: 5 hours ago
Passengers on fatal Southwest flight sue airline and manufacturers of plane and engine

Passengers on fatal Southwest flight sue airline and manufacturers of plane and engine

Eight passengers who were aboard a Southwest Airlines flight that was forced to make an emergency landing in Philadelphia after one of its engines blew apart filed suit Wednesday against the airline, Boeing and the companies that manufactured the eng...
Published: 06/20/18
Former employee sued by Tesla says he was a whistleblower

Former employee sued by Tesla says he was a whistleblower

Tesla sued a former employee Wednesday, accusing the man of hacking the automaker’s computer systems and stealing company secrets, shedding light on what chief Elon Musk had suggested was the work of a secretive internal saboteur.But the employee, Ma...
Published: 06/20/18
Seminole Heights restaurant Mortar & Pestle files for bankruptcy reorganization

Seminole Heights restaurant Mortar & Pestle files for bankruptcy reorganization

TAMPA — Mortar & Pestle, a fledgling Seminole Heights eatery with a mom-and-pop pharmacy theme, has filed for Chapter 11 bankruptcy reorganization. Seacoast Bank was listed as the creditor with the largest unsecured claim: $1.4 million.The restaurant...
Published: 06/20/18
Developer proposes Sprouts Farmers Market for Land O’Lakes

Developer proposes Sprouts Farmers Market for Land O’Lakes

LAND O’LAKES – A Sarasota developer is proposing to turn a vacant Winn-Dixie store in central Pasco into a Sprouts Farmers Market or similar specialty grocer.Benderson Development filed preliminary plans Monday with Pasco County to redevelop the form...
Published: 06/20/18