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Broken Markets: How High Frequency Trading and Predatory Practices on Wall Street are Destroying Investor Confidence and Your Portfolio
- By Sal L. Arnuk, Joseph C. Saluzzi
- Published May 24, 2012 by FT Press.
- Copyright 2012
- Dimensions: 6" x 9"
- Pages: 336
- Edition: 1st
- Book
- ISBN-10: 0-13-287524-1
- ISBN-13: 978-0-13-287524-0
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Product Author Bios
Sal Arnuk and Joseph Saluzzi, Chatham, NJ, own and manage institutional brokerage firm Themis Trading LLC. Experts in electronic trading and market structure, frequent contributors to CNBC and Bloomberg TV, their views have been presented in The Wall Street Journal, New York Times, USA Today, Los Angeles Times, and The Financial Times. Saluzzi was a key part of the Prime Time 60 Minutes Special on high speed trading. Before founding Themis, they worked for nearly a decade at the electronic trading pioneer Instinet and Morgan Stanley. Their opinions are sought by leaders, regulators, and market participants, and presented via their widely-read blog.
The markets have evolved at breakneck speed during the past decade, and change has accelerated dramatically since 2007's disastrous regulatory "reforms." An unrelenting focus on technology, hyper-short-term trading, speed, and volume has eclipsed sanity: markets have been hijacked by high-powered interests at the expense of investors and the entire capital-raising process. A small consortium of players is making billions by skimming and scalping unaware investors -- and, in so doing, they've transformed our markets from the world's envy into a barren wasteland of terror.
Since these events began, Themis Trading's Joe Saluzzi and Sal Arnuk have offered an unwavering voice of reasoned dissent. Their small brokerage has stood up against the hijackers in every venue: their daily writings are now followed by investors, regulators, the media, and "Main Street" investors worldwide. Saluzzi and Arnuk don't take prisoners! Now, in Broken Markets, they explain how all this happened, who did it, what it means, and what's coming next. You'll understand the true implications of events ranging from the crash of 1987 to the "Flash Crash" -- and discover what it all means to you and your future. Warning: you will get angry (if you aren't already). But you'll know exactly why you're angry, who you're angry at, and what needs to be done!
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71 of 98 people found the following review helpful
Manipulative, factually wrong, By Daniel (Cambridge, MA United States) - See all my reviews
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This review is from: Broken Markets: How High Frequency Trading and Predatory Practices on Wall Street are Destroying Investor Confidence and Your Portfolio (Hardcover)
Broken Markets tries to be informative of the problems with modern stock markets. At times, the book is informative. Unfortunately, the authors cannot make the picture clear. Their arguments sound correct at first, but after thinking about it, they contradict themselves many times on the same page (i.e., the authors are not coherent) Examples:- authors claim that HFT provides liquidity to the top 5% liquid stocks, but hurts the remainder 95% because they are unwilling to create a market for the less liquid stocks. On the same page, they also claim that the specialists (human market makers) are driven out because they cannot compete on speed. But if both these statements are true, why don't the human traders make markets for the 95% when HFT is not present? Makes no sense. - authors complain about the parity priority rules. Also, they say that old specialist systems are better and praise NYSE over NASDAQ, BATS, EDGE, etc. Upon looking into the issue,... Read more
38 of 52 people found the following review helpful
The authors have something to say, but they haven't said it here, By
This review is from: Broken Markets: How High Frequency Trading and Predatory Practices on Wall Street are Destroying Investor Confidence and Your Portfolio (Hardcover)
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I got this book because I have seen the authors quoted frequently over the last few years, and was never able to figure out what they were saying. It was clear they were against high-frequency trading, but then things always got confusing.Unfortunately, the book is no better. One problem is large parts of it are reprints of the earlier stuff I didn't understand, and other chapters are written by Ted Kaufman, R. T. Leuchtkafer (2 chapters), David Weild and Edward Kim. None of these authors are individually clear, and there is nothing to tie together the different parts. The newly-written parts of the book cite mostly the reprinted material, or general news stories that quote the authors. A bigger problem is there is no definition of high-frequency trading. I think of traders who put in thousands or millions of small orders, holding stocks for an average of under one minute, trying to profit from very short-term price phenomena. These are nowhere to be found in... Read more
12 of 16 people found the following review helpful
Cards Stacked, By
This review is from: Broken Markets: How High Frequency Trading and Predatory Practices on Wall Street are Destroying Investor Confidence and Your Portfolio (Hardcover)
Customer review from the Amazon Vine™ Program (What's this?)
When it came time for FDR to appoint the first chairman of the Securities and Exchange Commission, he selected Joseph P. Kennedy, a well-known stock market operator and speculator, presumably on the theory "it takes one to know one." Well, it was a good choice, and the SEC got off to a good start, its reputation and effectiveness not only lasting, but increasing for several decades. Unfortunately, in the last 10 years or so, this has not been the case, as theoretical economists and attorneys have led the regulator far afield from protecting investors, the original intent of the '33 and '34 Acts.As a result many new rules have been instituted changing the investment climate, and this treatise indicts many of them, especially what has become known as high frequency trading ("HFT"), a method that allows "front running," something that was always illegal. The authors, two well-known institutional traders, have been conducting a long-standing effort to do something about the... Read more |
Online Sample Chapters
Why the Stock Markets Are Broken
Table of Contents
Foreword by Former U.S. Senator Ted Kaufman x
Introduction 1
Chapter 1: Broken Markets 7
Chapter 2: The Curtain Pulled Back on High Frequency Trading 23
Chapter 3: Web of Chaos 45
Chapter 4: Regulatory Purgatory 67
Chapter 5: Regulatory Hangover 83
Chapter 6: The Arms Merchants 97
Chapter 7: It’s the Data, Stupid 111
Chapter 8: Heart of Darkness 125
Chapter 9: Dude, Where’s My Order? 141
Chapter 10: The Flash Crash 151
Chapter 11: The Aftermath 177
Chapter 12: Killing the Stock Market That Laid the Golden Eggs 195
Chapter 13: Call to Action 217
Appendix: Themis Trading Whitepapers 233
Index 289
Sample Pages
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