Foolish Traders Versus 21st Century Supercomputers
So, you still don't think your equity markets are manipulated? Still don't believe that some offshoot of the President's Working Group on Financial Markets is engaged in buying and selling equities to hold the line at key technical levels or to bolster and sustain runaway rallies? Fine ... you'd be correct to state that direct evidence of those kinds of activities are still lacking for the broader markets (in precious metals orchestrated manipulation by a handfull of bullion banks has been well documented).
However, whether or not the markets are "rigged" hinges not only on the existence of such coordinated actions, but also on the unfair advantages that the wealthy brokerage houses and hedge funds employ to make sure that the retail investor, namely us, will always remain at a competitive disadvantage.
What amazes me about this fascinating criminal case over computer trade secrets alledgedly stolen from Goldman Sachs, is that the trade secrets should be entirely illegal in a market that can be considered fair or unrigged. Goldman Sachs' supercomputing secret sauce succeeds at the expense of the trading masses, and every short-term trader in my opinion has an interest in seeing these unfair practices taken down!
The platform is one of the things that apparently gives Goldman a leg-up over the competition when it comes to rapid-fire trading of stocks and commodities. Federal authorities say the platform quickly processes rapid developments in the markets and uses top secret mathematical formulas to allow the firm to make highly-profitable automated trades.
The bio information for Aleynikov on LinkedIn says he joined Goldman in May 2007 and was vice president for equity strategy. The bio says he was responsible for “development of a distributed real-time co-located high-frequency trading platform.” In his own words, he goes on to describe the platform as “a very low latency (microseconds) event-driven market data processing, strategy and order submission engine.”
For further reading, blogger ZeroHedge's analysis of the events.