Having trouble growing your savings? Have your stock market investments become a chronic source of losses? Don’t be too hard on yourself: the markets are increasingly rigged to give institutional traders the opportunity to make money.
The Wall Street Journal reports that high speed traders are exploiting a hidden loophole in the Chicago Mercantile Exchange’s (CME) computer systems, and that the CME has had knowledge that they are profiting from it. (Source)
They make more money because they have access to information before everybody else. By the time us little guys make a trade, the big guys have already reaped their profits and are moving their money out, leaving the rest of us behind in our losses.
The fact that this is occurring isn’t breaking news. A similar exposé ran last September. Some people have written books about it. Even government statistical agencies have investigated for leaks of data. The big news here is that now we have proof that market operators knew about it and did nothing. I can’t say I’m surprised. Are you?
A couple of years ago, I saw an interview in which an investigative journalist confronted several banking executives for their unethical business practices. They replied that it was the responsibility of legislators to write tighter laws and plug the loopholes, but in the meantime they would exploit them. The journalist couldn’t believe that these guys’ morality was only limited by what was legal.
This is just another instance of how market economies are being undermined by immorality. I will expound on this in another post.