Dear CIGAs,

Here is a perfect example of what has gone wrong with our financial markets and why they are becoming irreparably destroyed as an indicator of true value. As I have said repeatedly, the influx of hedge fund money under the control of black box algorithms instead of providing liquidity as they falsely claim is actually working to undermine the integrity of our financial markets.

We no longer have a venue where buyers and sellers meet to determine “value” but rather where computers push prices in attempts to generate price movement so that they can create profits out of that movement based on their ability to fire off a series of rapid fire Buy or Sell orders. This has absolutely nothing to do with balancing the forces of supply and demand and everything to do with separating the investing or trading public from their capital who are the minnows swimming in this sea of unethical and unprincipled sharks.

Trader Dan

High-Speed Washing Under Scrutiny In Futures Mkt
Wed Jul 14 14:54:43 2010 EDT

1854 GMT [Dow Jones] Regulators are trying to get a handle on how to make sure electronic trading firms aren’t trading with themselves. At CFTC roundtable on market technology issues, FIA officials warn that trading firms running multiple algorithms sometimes end up unintentionally hitting their own orders, and while exchanges like CME Group (CME) and IntercontinentalExchange (ICE) have made efforts to identify such issues, it’s an ongoing process. Rules around wash trades — riskless transactions that are prohibited in US mkts — may have to be clarified, according to FIA.