Broken Markets Web of Chaos推荐.pdfVIP

3 Web of Chaos Joe Saluzzi was a guest on CNBC’s “Street Signs” segment with Brian Sullivan and Herb Greenberg. It was the afternoon of October 10, 2011. The discussion centered on the volatility caused by high fre- quency traders and confidence in our stock market structure. “Ninety billion has come out of domestic equity funds since May,” Joe said. “It tells you the confidence is not there The markets are broken.” Greenberg agreed. The next day the veteran business journal- ist penned a scathing article on the cable channel’s website, titled, “Yes Virginia, the Markets Are Broken.” Joe was right, he wrote. “And I’ll take it one step further: Until further notice, investing the old- fashioned way is dead—maybe forever. Yes, maybe this time it really IS different.”1 We first started noticing in 2007 just how badly our markets are broken. It stung when one of our best customers criticized our trad- ing abilities. Although we had become accustomed to penny-jumping, automated scalpers since the mid-1990s, something had changed. With the mere entry of small, 300-share limit orders, we began to notice increased “wiggle” in the form of the following: • More quote-flickering: When we sent to take stock offered on an exchange, the offer would mysteriously rise or disappear just as we arrived. • More penny-jumping: Each time we would buy or sell stock, it seemed that others were tipped off to our intentions in real time. 45 46 Broken Markets • More impact on prices: Even small purchases would cause stock price movement away from us in ways much more notice- able than we had ever seen before in our careers. As agency stock brokers with a fiduciary duty to get our clients the