"To understand what the SEC's war on daytrading is about
you must understand that the greatest monopolist of
information processing in the United States is not
Microsoft, it is the SEC. Just as Microsoft, the SEC
licenses the means of information flow, the difference
between them being...that the SEC can impose more
economic pain on those who threaten its monopoly.
Daytrading, which relies strictly on what is in the
market itself for information (rather than the order of
the integrated disclosure system) and the Internet whose
sources of information are democratic, anarchic and
wonderfully subversive are metaphors for the freedom to
identify as irrelevant the Commission's view of the
information which should be available to market
participants."
This, by Saul Cohen, came from the link to Momentum
Securities that is posted next to the Fox news article
(noted in Eric P.'s post). There is a link, at the bottom
of the Momentum home page, to Saul Cohen's articles
titled "The Empire Strikes Back" parts 1 and 2. Cohen
was featured on CNN's Moneyline program the other night,
and allowed to give a brief rebuttal to the SEC's recent
derogatory public comments directed towards daytraders.
Unfortunately Cohen is generally not a plain spoken man
(he's an attorney for the Electronic Trader's
Association) and his writing and speaking style somewhat
obscure his very important message: That there is an
immense and concerted institutional effort to rein in
daytraders rather than cater to, or capitulate to, them.
And the SEC leans toward acting in the best interest of
the institutions rather than the people of this country.
They want "the people" to be happy with whatever returns
the mutual fund industry can deliver to them, while
reserving the larger profits for the institutions
themselves who are shepherding the herd's money.
Notice how Saul appropriately capitalizes the I in
Internet? What has happened in just the last few years,
thanks to the Internet, is the profit potential of the
institution has been eroding thanks to the volatility
provided by the new major players in the arena: the herds
themselves.
Technology has beefed up the herd and it is scaring the
shepherds.
Notice how reluctantly Goldman Sachs and ilk are to enter
the fray of Internet-based information dissemination and
trading? They obviously would rather fight than switch,
as the old tobacco marketing slogan went. But faced with
the mutiny of their customers, their choices are quickly
narrowing. They can either lower their commissions and
lose huge revenues, or keep them high, and still lose
revenues. What else do they have up their sleeve (to use
the gambling lingo they sooo love)...Ah yes, the arm of
the SEC.
So the SEC is using all the elbow grease they can to
scrub the truth out of the real story behind daytrading,
and to try and somehow wrest control back, away from the
people's keyboards, and into the hamfists of the
institutions again. Capitalizing on anything they can,
from negative plugs in sensationalized "news" articles,
to press releases released to coincide with workplace
violence news stories, the institutions and SEC are
battling in a concerted effort to use regulations to put
daytraders out of business. But if what they say is
true---why bother to use regulations? If what they say
is true, won't daytraders all be out of business soon?
No, because their disinformation campaign is false. The
ranks of daytraders are growing, and only if the market
is once again rigged to give advantage back to the
institutions will the number of daytraders decline.
Yeah, it makes the institution's job harder, and profit
lower, because ECN's and the daytraders that use them
serve democracy by reducing spreads. Just like the
Internet makes it harder in general for multinational
corporations to take advantage of people.
The disinformation campaign is the main weapon available
in countries with free speech laws, to combat the
democracy provided by the web and ECN's. We will see
more and more restrictions proposed by the beltway
lobbyist puppets. A popular angle is "in the interest of
the children", or in the case of middle class adults
experimenting with daytrading, the angle is "to save them
from hurting themselves with this new powerful
technology".
Watching the powers-that-used-to-be scramble to recapture
control is comical, and I have relished reading the
laughable parade of recent press missives on daytrading,
but am sobered, recalling these words of Abraham Lincoln:
"The money power preys upon the nation in times of peace,
and conspires against it in times of adversity. It is
more despotic than monarchy, more insolent than
autocracy, more selfish than bureaucracy. It denounces,
as public enemies, all who question its methods or throw
light upon its crimes." |
