Courtesy of Pam Martens.
Congressman Edward Markey of Massachusetts
Congressman Edward Markey (D-Massachusetts) sent a letter to the Securities and Exchange Commission (SEC) last week, asking it to use its inherent authority to limit the use of High Frequency Trading. Markey called the practice a “clear and present danger to the stability and safety of our markets” and said “its use should be curtailed immediately.” He noted that Congress had already given the SEC the power to ban this practice. (See full text of letter at link below.)
High Frequency Trading (HFT) is a technique used by sophisticated Wall Street firms and hedge funds using algorithms to buy and sell stocks on exchanges in a fraction of a second, or as Markey put it in his letter, “thousands of times faster than a human can breathe or even think.”
Markey details for the SEC a system that has effectively consumed the marketplace, pushed out the individual investor, and has left a risky, highly volatile market prone to the vagaries of fast, fickle money.
In his letter to the SEC, Markey makes reference to a speech given in 2010 by Andrew G. Haldane, the Executive Director of Financial Stability for the Bank of England. (Full speech at link below.) Haldane had noted that in 2010, high frequency trading firms accounted for 70 percent of equities trading in the U.S. The context of that statement in the speech by Haldane is as follows:
“Warren Buffett told Berkshire Hathaway investors in 1988 ‘our favourite holding period is forever.’ But for an increasing fraction of the financial world, the favoured investment horizon seems to be whenever.
…
