The Market Structures are BROKEN!!

While the market is working to digest the better than expected Unemployment Report this morning, put the pom-poms away please. No, I am not negative on the report, I am calling bulls%*# on a crony capitalist system that allows for so-called market exchanges to develop and function as they did yesterday.

Fat finger (meaning a trade size was incorrectly entered)? I do not buy it. I think yesterday was nothing more than so-called liquidity providers engaging in high frequency trading, and taking investors to the hoop in a HUGE way. How so?

As sell orders built, the liquidity, which high frequency traders pretend they provide on the upside (it’s called front running, boys and girls) evaporated as the HFT literally turned off their machines. What happened as a result? The market plunged and trades were executed on selected stocks at some exceptionally low prices. How would you like to be the investor that got filled on a sale of Procter and Gamble below $40 on the gap down and then saw the stock whip right back to close above $60.

Is that trading? Is that investing? Is that a credible marketplace? No, that is a rigged game in which those who control the process are taking advantage of their physical and financial positions. Who are these entities?

1. The exchanges themselves which have cut deals with the large high frequency trading entities to capture volume.

2. The high frequency trading entities run by the large banks and assorted dealers.

3. The regulators in Washington which have curried favor with the industry and allowed this marketplace to develop. Are these regulators protecting investors? Anything but. The regulators have shown themselves to be in bed engaged in incest with the industry. That smells!!

Yesterday was crony capitalism at its best!! The market structures are BROKEN!!

Count me out.

About Larry Doyle 522 Articles

Larry Doyle embarked on his Wall Street career in 1983 as a mortgage-backed securities trader for The First Boston Corporation. He was involved in the growth and development of the secondary mortgage market from its near infancy.

After close to 7 years at First Boston, Larry joined Bear Stearns in early 1990 as a mortgage trader. In 1993, Larry was named a Senior Managing Director at the firm. He left Bear to join Union Bank of Switzerland in late 1996 as Head of Mortgage Trading.

In 1998, after 15 years of trading and precipitated by Swiss Bank’s takeover of UBS, Larry moved from trading to sales as a senior salesperson at Bank of America. His move into sales led him to the role as National Sales Manager for Securitized Products at JP Morgan Chase in 2000. He was integrally involved in developing the department, hiring 40 salespeople, and generating $300 million in sales revenue. He left JP Morgan in 2006.

Throughout his career, Larry eagerly engaged clients and colleagues. He has mentored dozens of junior colleagues, recruited at a number of colleges and universities, and interviewed hundreds. He has also had extensive public speaking experience. Additionally, Larry served as Chair of the Mortgage Trading Committee for the Public Securities Association (PSA) in the mid-90s.

Larry graduated Cum Laude, Phi Beta Kappa in 1983 from the College of the Holy Cross.

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