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Well we've been reporting this all day CME group and NASDAQ announcing that they're gonna launch a new high speed network that will transmit stock data in even smaller fractions of a second than before.
But will this super fast network only benefit high frequency traders often blame for that.
2010 flash crash -- -- capitals 400 million dollar trading glitch.
Joining us now -- -- first on Fox Business interview CFTC commissioner.
Bart Chilton and part you have been welcome to the program you've been outspoken about the high frequency guys in the so called.
She -- trader's name because they're so unbelievably fast but.
Tell us what this means to you whether you like it accept it embrace it or completely against it.
Well -- -- -- -- David you know I'm I'm fine with technology we shouldn't be scared of technology.
But we just need to ensure that we have appropriate rules of the road so that there's not.
An unfair advantage particularly one that.
Has it makes a problem for small guys -- we did a study.
Back in December where it showed that these cheetah traders -- high frequency traders.
Actually make more on trades from the smaller retail guys than they do from -- sort of sophisticated high tech -- so.
I'm not concerned about that the the network being fast.
Fast is fine with me it's just a matter of whether or not these guys are acting appropriately in the market.
And I think and I got a couple examples of -- places where they're not okay well I I we understand that that that's your position you're worried about the the end users and and the retailer -- support but.
Play devil's advocate for just a mom because some people say that you were against high speed trading you say not so.
Defend at high speed trading what good comes out of high speed trading.
Well -- they add liquidity to markets David I mean that they are trading whenever they trade they trade with somebody's.
And they're super sophisticated.
You know they're watching fox business and every time you mention.
Whatever firm it is that goes into their algorithm very often and so they're very sophisticated.
And I think that should make for smarter markets.
But with regard to the liquidity.
It's only fleeting liquidity because it's there for like that and the second thing it is that.
-- once a wild not -- a while in voluminous instances guys they are engaged in what we call watched trading where they trade with themselves.
That creates false liquidity.
Fantasy liquidity if you will.
Which could ignite markets I mean if you're trader and you see all the all that all this training go on you may say I gotta get into the feeding frenzy.
But if they're just trading with themselves and not taking on any risk.
One it's against the law and -- it's something I think we need to review and figure out why they're doing it and why the exchanges are letting them do it it it might.
And sort of gut reaction to this voluminous number of wash trades guys tells me that it can't be happening by accident.
OK so friendly and when you you just said the exchanges now we know that the New York Stock Exchange has an operation out mile walk.
It New Jersey where they've got high speed traders anybody rant but you have to it costs a lot of money and -- -- locating the closer you order the servers the faster your traits -- the more money make.
I can't do that with the TD Ameritrade account and you know fifty shares of AT&T how -- and there is a danger to -- they're not of some -- rhythm going haywire and the markets start to fall precipitously -- rise precipitously.
Those are those are both excellent points list one not everybody has advantaged -- this high speed trading self.
And matter fact a lot of traditional traders these end users that I've -- been trying to defend so vigorously.
They don't all have access to admit to this stuff so.
Are these high frequency -- traders sort of the new -- -- taking the cream off the top of markets before of the slower guys get into it.
So one that's a concern.
And -- I think that it depends on.
Looking at these things to a degree to ensure that they're abiding by the rules and regulations and today they're not even required to be registered with us which means we can't get their books and records they're not required had kill switches so if you look at the flash crash where -- automated system investigated that and a bunch of other cheated traders.
Propelled the flash crash.
If they had kill switches that would have stopped it so there -- things that need to be done absolutely in these markets and I hope we get on the stick and do it by the -- let's be specific when you say and users you're talking about people who actually have a physical -- in the game very often farmers are people like that.
They have the most to lose don't that.
Absolutely David won again our report talks about how would -- they trade with -- -- date suffer the most.
But these guys whether or not at the farmer or rancher or a utility company.
By the way some folks that we have never been regulated by our little agency in the past or whether or not the mining company and energy company.
These guys were not the reason why we had the financial -- it was the large investment banks it was these exotic.
Over the counter traded products.
Like credit default swaps but these guys were what the markets were traded for to ensure that they could transfer risk.
And that's good not just for the end users it's good for consumers and so once these markets become just a playground for the cheaters and these.
Massive passive speculators that I've talked about with you before once it becomes sort of a casino orgy for those guys.
We've lost our way.
And that's -- -- -- sure that we're sticking to the fundamental purposes it would of these markets which is not should be good for all -- good for our economy and good for the economic engine of our nation.
Our market sometimes it really gets more -- to really get great to have you actually defend high frequency trading though if it's done right.
It can really move the markets in a very positive way always pleasure to see -- thank you so much for coming in.
Good to see guys in the --
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