Selling Trust and Transparency

// Posted by on 06/04/2015 (6:57 PM)

There are many things that come to mind after this week’s readings.  Two sayings I have heard many times in particular,  The first one is, “Follow the money!”  Whenever there is something that does not seem right or illegal, just follow the money.  Another saying, this one is from my dad, “The sooner you realize that life isn’t fair, the better off you will be.”  Of course people with money are getting to trade faster.  Of course people with power have the advantage.  It is not fair, but, what can be done about it?  I just think it is funny that we think that trading stocks is set up for everyone and it is fair.

We read in the article, High Frequency Trading:  Networks of Wealth and the Concentration of Power, “…that in many ways the powerful have become more rather than less powerful due to digitization; that the powerful have a great deal of influence over how digital tools and effects are distributed throughout the world and can and do monitor and control distribution of power.”

I can see why some would think that a computerized system would be a leveling tool.  We all have the internet, some with greater speeds, we all have money, some have more, we all have the same opportunities to buy, no we don’t.  I saw this story on 60 Minutes,  and it proves that it really isn’t a system that is fait to all of us.   michael-lewis-stock-market-rigged-flash-boys-60-minutes.   Brad Katsuyama is offering the transparency that digitization was supposed to give us in the first place.  He is selling truth, even he is amazed.

The very scary thing that is mentioned in the article and in the 60 Minutes clip is there is really no regulation.  Even the  up-fronting mentioned is not illegal.  From the article, “that is to say that it is not at all clear anymore who is in charge of the securities markets…”  The machines have taken over.  Only when people like Brad Katsuyama question what is happening  will there be change.



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Rosatelli said...

Hi Ginger,

I invite you to dig a bit deeper into this issue. When you say that the machines have taken over, you are really reinforcing what Kelly and others WANTED to happen–it’s systems thinking at its best! Some problems do occur. When algorithms follow the news cycle to make trades depending on current trends, rumors and mistakes can cause fluctuations in the markets. In a strange way, social networks could shift the stock markets, not rationally thinking traders. Why does this matter? People make mistakes too, why are we so hard on machines when they do? We often think of the human element that machines typically don’t have: good judgement. We can make a call on a rumor because we have the experience to know that it should influence stock prices. Machines cannot (yet) because they have no history–no experience–to make that call. Machines react.

// 06/04/2015 at 8:26 pm

Shirley said...

Well, my lawyer was the person who told me “The sooner you realize that life isn’t fair, the better off you will be” after hearing me whine over the divorce settlement. I would agree that the monetary divide just keeps getting wider and I am not convenience that faster computer programs are going to totally solve this issue. Regulation, security, privacy all needed to keep up with this fast past digitization.

// 06/05/2015 at 5:07 pm

SarahP said...

Technology really is amazing- it is mind blowing how quickly stocks can be purchased. It is also scary to think about the lack of regulation and and “rules” so to speak. Shady business going on there…

// 06/06/2015 at 1:40 pm