“It’s been four years since the Flash Crash on Wall Street sent stocks into a 900-point bungee jump, wiped out over $200 million of investors’ money by improperly triggering stop-loss orders, and shredded public confidence in stock markets. And still, to this day, the Securities and Exchange Commission does not have a Consolidated Audit Trail (CAT) to properly police who is placing orders, at what time, at what speed, in what securities and in which trading venue.” P & R Martens
Serious observers of Wall Street are increasingly asking this question: could a group of trading venues with giant pools of capital, operating in the dark, using high-speed algorithms and artificial intelligence that has a massive historical database and gets smarter with each micro-second trade — effectively own the stock market. Today, we take a look at the massive trading control exercised by just five Wall Street firms.
JPMorgan Chase, Bank of America and Citigroup jointly control trillions of dollars in commercial bank deposits with thousands of branch bank buildings stretching across the United States scooping up the life savings of everyday Joes who have no clue these are also the Masters of the Universe on Wall Street.
Goldman Sachs and Morgan Stanley also own FDIC insured banks. Goldman Sachs Bank USA, as of March 31, 2014, has $104.7 billion in assets; Morgan Stanley Bank, N.A., as of the same date, has $108.8 billion in assets.
These institutions have access to the Fed’s discount window, super cheap access to capital from FDIC insured deposits and a massive subsidy of their institutions under the too-big-to-fail doctrine. And, they also own outright or jointly a large swath of anything and everything that passes as a trading venue on Wall Street today.
The dark pool known as BIDS Trading, L.P. says it “was designed to bring counterparties together to anonymously trade large blocks of shares.” According to its web site, it is owned by: JPMorgan Chase, Bank of America Merrill Lynch, Citigroup, Goldman Sachs and Morgan Stanley – along with other financial firms. Continue reading