In 2012, Many Felt the Market Was Rigged

In 2012, Many Felt the Market Was Rigged
By Michael Santoli | Yahoo! Finance – Mon, Dec 24, 2012 1:37 PM EST

In 2012, investors’ long-harbored suspicion that the stock market was a rigged game became something of a majority opinion.

This year, exasperation over the predominantly electronic mechanics of trading stocks, in which hyper-fast computer algorithms maneuver against one another for fractions of pennies collected over microseconds, boiled over. The level of disgust has gotten broad enough, in fact, that authorities might be prepared to rethink some of the basic rules and processes driving the system.

The opaque and complex structure for trading stocks electronically across dozens of exchanges and alternative networks has long been justified by industry leaders and regulators as the messy but logical result of investor-friendly reforms. Technology has enabled mind-melting speed, unfathomable communications capacity and brutal competition for order flow – all of which have made trading cheaper and faster than ever.

Yet by squeezing out traditional market makers who once collected low-risk, protected profits by mediating among buyers and sellers, rules and technology have tilted the power toward “high-frequency traders.” And in 2012, the fragility produced by so much layered complexity became too obvious, and produced too many market-jarring failures, to be considered merely the price of progress.

https://finance.yahoo.com/news/in-2012–many-felt-the-market-was-rigged-183735394.html