Bid /Ask Spreads - Market Manipulation Message Board

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Non-Tech : Bid /Ask Spreads - Market Manipulation

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next

To: Eric Hovdesven who wrote (69)	9/11/1996 12:19:00 AM
From: NightOwl	of 308

Hi Eric, I really haven't given this much thought and frankly my degree of ignorance on this topic is legendary. But I do like to pontificate so here goes. It would seem to me that if one can create a system whereby computers could handle a billion shares traded in one 10 hour period; you could link those computers to a second network of computers (regulators) which could audit transactions performed by the trading network during non-trading hours. While this system might be difficult to fool I assume it would not be fool proof. One way of eliminating the temptation would be to make the cost of successfully circumventing the computers security system far outweigh the rewards of a successful attempt. This might be accomplished by restricting the number of companies which can serve as online trading gateways. The companies would have to have substantial capital requirements and asside from regulations for uniform/compatible hardware and software, they would only have to meet three basic standards: (1) they must maintain a redundant real-time system with widely disbursed back up systems capable of handling twice their average daily volume for an appropriate preceding period (say 60 days?); (2) they must have no affiliation or contractual relations with competitors, brokers or underwriters; and (3) any thefts or loses incurred as a result of company or employee tampering must be made good 100% within 30 days or the company and its management are banned from the industry and their assets are placed in receivership for the benefit of their clients, to the extent of the losses. There would be no limit on the fees they could charge aside from the limitations imposed by competition, so the number of licensed gateways would have to be competitive. I have no idea how many this should be but I would think no fewer than 20 would be necessary. In such a system I hope that the gateway franchises would generate significant income in volume trades and would be capital intensive. Each company would impose substantial security controls of its own to prevent employee tampering or face ruin. The degree of government intrusion would be kept to a minimum and the market would reward the competent and honest. Government regulation of these shops could consist of a relatively small group of techies who would run the audits during the 14hours of non-trading activity. System breakdowns sufficient to hault trading by a gateway would require special attention from these tech auditors, but that should be minimal. Of course this does not address fraud by companies themselves, or brokers or underwriters. But I suspect that simply eliminating the incestuous relations between brokers, underwriters and investment banker types would do wonders for individual investors. If I could just be assured that they don't have their thumbs in the trading pie itself, I would be willing to take my chances. My object is not to eliminate the risk of buying a pig in a poke, and snake oil salesmen have to earn a living too. All I want is a system wherein exercising common sense means something.

Report TOU Violation

Share This Post

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next