Hi engineer - Your perceptions are widely shared.
In over 7 years of discussion here, there's been an array of opinions about HFT. Some support the source of their daily bread. Others, from an ideological/political viewpoint. They see it as all benefit, no cost. Very few have invested the time and effort required to understand the risks. Congratulations -- you belong to a minority!
Post-financial crisis, the absence of effective reform has rendered the opinions of ordinary people moot. The array of misdeeds by the financial sector, and their costs -- to the economy, to taxpayers, to our childrens' future -- is staggering.
' If these people had been engineering graduates, we'd have buildings and bridges collapsing, roofs caving in, dams bursting - and to top it off - engineers awarding themselves astronomical compensation, while making profits from bets on these events via Alternative Risk Transfer, using leveraged carry trade money.'
But "too big to fail" banks are even bigger. Growth of shadow banking continues unabated. As does thievery and fraud...
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List of “misdeeds” by banks; as @ 19 December 2015
'This list was compiled by Robert Jenkins, formerly a member of the Bank of England's Financial Policy Committee and now Adjunct Professor of Finance, London Business School and Senior Fellow at Better Markets, and first delivered at the Finance Watch conference "Confidence, ethics, and incentives in the financial sector" on 17 November 2015.
Bob Jenkins’ partial list of banking misdeeds to date:
Mis-selling of payment protection insurance
Mis-selling interest rate swaps
Mis-selling credit card theft insurance
Mis-selling of mortgage-backed securities
Mis-selling of municipal bond investment strategies
Mis-selling of structured deposit investments
Mis-selling of foreign exchange products
Fraud related to the packaging and selling of mortgage-backed securities that institutions knew to be “toxic waste”
Misleading statements to investors involving capital-raising rights issue
Misleading investors in the sale of collateralised debt obligations
Abusive small business lending practices
Predatory mortgage practices
Abusive or in inappropriate foreclosure practices
Aiding and abetting tax evasion
Aiding and abetting money laundering for violent drug cartels
Violations of rogue-regime sanctions
Manipulation of Euribor
Manipulation of FX markets
Manipulation of gold fixing (London)
Manipulation of commodity markets via metals warehousing practices
Manipulation of electricity markets (California)
Manipulation of the swaps market benchmark index (Isdafix)
Collusion relating to credit default swap market dealing in violation of US anti-trust laws (“settlement” reached with authorities to resolve allegations)
Filing false statements with the SEC (London Whale)
Keeping false books and records (London Whale)
Reporting failures relating to Madoff
Withholding of critical information from Italian regulators
Bribing civil service employees in Japan
Mis-reporting related to Barclays emergency capital raising
Stealing confidential regulatory information by a banker
Collusion with Greek authorities to mislead EU policy makers on meeting Euro criteria
Financial engineering with the aim of moving Italian debt off-balance sheet
Manipulation of risk models with the aim of minimizing reported Risk Weighted Assets / capital requirements
Electronic FX trading related market manipulation
Process and control failures with respect to dealings with the ultra-wealthy/ “politically exposed persons”. (Elephant Deal - Barclays 11/’15)
Failure to prevent bribery of African officials (Standard Chartered)
Peddling complex tax avoidance strategies to corporate clients (Deutsche)
Improperly providing information about a Japanese company to its clients (Deutsche)
Failure to disclose conflicts of interest to wealth management clients (JPM)
And currently under investigation…
Manipulation of precious metals markets (gold/silver/platinum/palladium - Switzerland)
Manipulation / collusion of the US Treasury Market auction/client sales
Manipulation of energy markets
Short changing clients a second time in not paying settlements in full
Violations connected with emergency fund raisings
Falsifying customer data and records
Misleading shareholders ahead of RBS rights issue
Misleading shareholder information with respect to Lloyds takeover of HBOs
Conspiracy to force small businesses into bankruptcy to the benefit of the lender
Insertion of illegal rate floors in Spanish mortgage lending
Faking customer files to justify predatory foreclosure practices
Misleading profit and capital statements based on questionable accounting practices
Bribing (“Improper payments”) officials in connection with license applications in Saudi Arabia
Hiring sons and daughters of senior officials in return for favours
Fabricating complaint letters after the fact to justify dismissal of a whistle-blower who raised alarms over possible mis-selling of mutual funds.
“Mis-informing” (lying) to 4500 people over existence of dormant accounts'
The list is oriented to the UK, but no matter. The financial sector commits its crimes globally.
~~~
In case anyone needs reminding, only one country in the whole wide world has jailed banksters -- Iceland.
So what are the chances that we'll see effective HFT reform? Don't hold your breath.
Jim |
