High Volume Trading – Front Running

sent in by a Millennium-Ark reader

January 22, 2012

Hello again,

Yesterday I was working on some data related to Goldman sachs and their apparent hostile takeover that is in progress in the EU, (namely Greece) and I have happened across something interesting. I was a little surprised that I had not heard about this yet because I read non stop.

It seems that Goldman sachs, and a selection of other top brokerage firms (best guess is no more than six) have supercomputers that are networked directly into the NYSE. They pay the stock exchange a fortune for this service and it allows them to trade huge volumes at break neck speed. I.E. before the retail investors even get a chance to place a transaction. The scary reality of this scenario is that it is widely speculated that due to this activity, 70% of an average days volume on the NYSE is happening via predatory algorithm right there on the floor, with no human interaction.

This scenario suggests to me that we really could never manage to have an economic recovery due to the fact that a large part of our countries actual human generated value is being skimmed away by the program, and that we humans only represent 30% of the action. Now it seems kinda funny to me when I hear someone talking about "investors confidence ".

That having been said however, imagine if this technology were used for good and not evil. One could imagine a scenario where the national debt got paid, or all of our social programs were fully funded. This practice has been highly criticized as illegal Front running in some circles.

There is not much media coverage to go with it (surprise) and it seems for the time being (and the last three years) the SEC is more than happy to let the condition persist. This could use some attention due to the fact that very soon our government will once again put its dysfunction on parade over the debt ceiling. All the while Goldman sachs is price fixing the NYSE and buying Greece as it were...

Thanks
William White