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Markets Unfair for Small Retail Investors?

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  • Description

    FBN’s Gerri Willis on the lack of fairness in the markets.

  • Duration 2:45
  • Date

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My mom always told me that the world's not fair and expecting that is a recipe for frustration.

However the unfairness in the stock market that's a problem that deserves fixing.

That's because the stock market doesn't belong to just one type of trader -- to all of us.

High frequency traders professional traders whose lightning fast trades preclude any real fundamental choices being made date dominate the trading world these days.

And more widely recognizes the folks behind flash crash you remember that may sixth 2010.

Saw that on our air the day the market fell hynix -- -- thousand points and then.

Rallied back nearly as much.

They also brought us the Knight securities gap and a myriad of other examples of weird trading is in fact we have -- crashes every single day because of them.

Now lots and lots of professional traders not all of them the high frequency sort defend their way as saying they provide liquidity.

But today and new study is shedding light on who gets the short end of the stick and -- has not pretty.

According to a study by on Andrea -- Orlando no less -- the -- economist of the commodities future trading commission.

High frequency traders make big profits off small retail investors.

Three dollars and 49 cents for every futures contract while they get a dollar money to -- in that's institutional investor contracts that's a big difference.

The -- the study concluded the markets were a zero sum game in which high speed profits came at the expense of other traders.

He's not the only canary in the coal mine former SEC chairman Harvey Pitt said this to me recently.

Well I think we have to get a grip.

On technology.

-- -- high frequency trading we have -- securities.

We have the flash crash we have.

NASDAQ.

And FaceBook and all of these problems are steam -- -- And there has to be some orderly mechanism by which people use technology.

According to well established rules.

Technologies -- technology that is just data control.

And regulators like Treasury Secretary Tim Geithner and Federal Reserve Chairman Ben Bernanke.

Have written accelerating automation of the markets may threaten their very stability.

In an annual report of the federal stability oversight council this is what they said.

The evolution of the markets could lead to unintended errors cascading through the financial system.

Not sound like a big fat disaster right.

I want a system -- regular investors viewing me can trade stocks -- not be worried about coming out on the short end of the stick.

The stock markets were developed in this country as a mechanism for raising capital -- pricing assets.

Let's get back to --

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