Market manipulation

Things have been getting really interesting recently at Zero hedge. For months now they have been shining a light on the growing percentage of trades conducted electronically by automated computer systems. The story continues: “This week’s NYSE Program Trading report was very odd: not only because program trading hit 48.6% of all NYSE trading, a record high at least since the NYSE keep tabs of this data, but what was shocking was the disappearance of the #1 mainstay of complete trading domination (i.e., Goldman Sachs) from not just the aforementioned #1 spotbut the entire complete list. In other words: Goldman went from 1st to N/A in one week. Even more odd, this “disappearance” comes hot on the heels of what Zero Hedge reported could be potentially a major change to the way the NYSE provides its weekly program trading report”. The NYSE has said they will be decommissioning the requirement to report program trading activity via the Daily Program Trading Report, which will essentially make sure that nobody will henceforth be able to keep track of the complete dominance that Goldman Sachs exerts over the New York Stock Exchange.

Right after this, Sergey Aleynikov, an ex-Goldman Sachs computer programmer, was arrested by FBI agents on July 3 after arriving at Liberty International Airport in Newark, New Jersey. Aleynikov, 39, who has dual American and Russian citizenship, is charged in a criminal complaint with stealing the trading software.

Assistant U.S. Attorney Facciponti has some choice words:

The bank has raised the possibility that there is a danger that somebody who knew how to use this program could use it to manipulate markets in unfair ways,” Facciponti said. “The copy in Germany is still out there, and we at this time do not know who else has access to it.

The proprietary code lets the firm do “sophisticated, high-speed and high-volume trades on various stock and commodities markets,” prosecutors said in court papers. The trades generate “many millions of dollars” each year.

Not even going to attempt to elucidate in how many different ways the first sentence above is just…plain wrong. At least it is refreshing that none other than Goldman’s own de facto attorney admits that the firm has created a piece of code that permits “market manipulation.” When Goldman is the perpetrator, the manipulation is conveyed via “fair ways.” And when the manipulator is someone else, the ways become “unfair.”


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