The flashers of Wall street

Last two years have revealed many practices in the financial centers of the world that would be illegal in any other markets. The latest revelation is “flashing,” a practice invented by certain exchanges and ably assisted by electronic geniuses of trading houses who build “fast technologies.” In the mundane world of financial regulation, “front running,” and “trading based on insider information,” have always been illegal. In “flash trading,” the “big traders,” – the same ones the regulators considered “special” and showered with “privileges,” few years ago - are allowed to peak into the books and extract information to trade on – information that is not available to the mere mortals who live on the ground. It is only the penthouse traders – who could afford such a “purchase,” of information that flash trading was available to.

Perhaps, it is time to define what is meant by free markets. Free markets are those in which everybody has equal access to information and no additional privileges in trading, leverage, regulation, access to regulators or anything else. Just because one is “big” or “just too smart,” does not mean that he/she can circumvent the system. If any market participant does not understand this rule, perhaps it is time to get out of business. Next time somebody flashes – both the flashers and their handlers need to remind themselves of the principles of free markets.