It appears the SEC has issued fines against the NYSE. As previously discussed, regulators should look the markets as a whole when issuing punishment. Though participants should not be given carte blanche, participants simply use tools provided by the markets themselves. Exchanges should be treated as a regulated entity instead of a self-regulated entity.
If one takes a look at recent history of insider trading they will see that agents acted on material non-public information to take advantage of markets before information was publicly released. Should not our exchanges be subject to the same scrutiny? If they have information regarding positions that could potentially change the 'tides' of a security and this information is being released to certain individuals/entities as opposed to all individuals/entities (if such information is even allowed to be released), then doesn't this look, smell, and feel like insider trading? Thankfully legal entities and people are starting to act.
Speculation would expect greater scrutiny to financial firms regarding the purchase and use of information technology. Company equity value--in the most basic sense--is an accounting plug. Assets minus liabilities equal shareholders equity. Further, cash flows from assets need to be greater than liabilities or encumbrances to those assets to generate positive equity value (where equity value is a moving target). The equity value should not be at the behest of functions and pitfalls of exchanges. As long as the markets that allow such equity to become liquid are in a state of uncertainty and their integrity is compromised (though one could argue the public markets have never been strong in the integrity category since inception), then companies, shareholders and stakeholders, and banks all lose hedonic value in markets. We should strive for security value based on fundamental analysis, not security value based on manipulation of platforms and broken market function.
- Nile C.
5/2/14 4:30pmEST
If one takes a look at recent history of insider trading they will see that agents acted on material non-public information to take advantage of markets before information was publicly released. Should not our exchanges be subject to the same scrutiny? If they have information regarding positions that could potentially change the 'tides' of a security and this information is being released to certain individuals/entities as opposed to all individuals/entities (if such information is even allowed to be released), then doesn't this look, smell, and feel like insider trading? Thankfully legal entities and people are starting to act.
Speculation would expect greater scrutiny to financial firms regarding the purchase and use of information technology. Company equity value--in the most basic sense--is an accounting plug. Assets minus liabilities equal shareholders equity. Further, cash flows from assets need to be greater than liabilities or encumbrances to those assets to generate positive equity value (where equity value is a moving target). The equity value should not be at the behest of functions and pitfalls of exchanges. As long as the markets that allow such equity to become liquid are in a state of uncertainty and their integrity is compromised (though one could argue the public markets have never been strong in the integrity category since inception), then companies, shareholders and stakeholders, and banks all lose hedonic value in markets. We should strive for security value based on fundamental analysis, not security value based on manipulation of platforms and broken market function.
- Nile C.
5/2/14 4:30pmEST
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