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WWL>Topics>>7-7-14 12pm, Garland, Stock Market

7-7-14 12pm, Garland, Stock Market

Jul 7, 2014|

Is the stock market really open? New Orleans own Michael Lewis warned the stock market is rigged. Now we learn there’s something called "dark pools"--private stock trading platforms not available to the public. Again, who do you trust now?

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Automatically Generated Transcript (may not be 100% accurate)

Welcome back -- a whole New Orleans. Michael Lewis a well -- -- a certain age wise and I would suggest a lot of ways worldwide because of couple of those books have been turned in the movie -- when them. Corporate. And he created quite. Overall. In the financial community but his latest book when he went on sixty minutes. And said. The stock market is rigged and gave -- Very complicated story least complicated -- one that was true. And we've had experts on the it's they didn't agree with Michael. -- experts on that. Agreed with them in part and we've had others -- that is -- -- -- it's absolutely true. So what I would stumble along these stories and -- -- New York and. Bloomberg. In the -- in England. Talking about dork. Who winds. The headlines for the door pools please new. SEC probe. Dork who -- take larger share of trades of mutes. Securities scrutiny. And privates and dark pools in the American command. And it's always in the complicated subject we won't we tell you what we grow to be experts. -- professor David Letterman what -- -- -- -- -- -- -- Tulane University propelled to thank you for drawn. First -- -- it explained through real audience Q what is or -- and. Well at the first and be sure the audience that. A -- had a very bad name and you can conjure up evil in the -- them just by very word that. So let me just say that. First that a dark pool is nothing more than and other trading venue. And an example of the trading venue with a New York Stock Exchange debt would bring together buyers and sellers of stocks. And they trading -- with nothing more than that and so dark pool. Is -- trading venue however. The big distinction that dark pool as older. And exchange that you would recognize -- the New York the American but the NASDAQ exchange and there are many electronic exchanges. And other regional changes. It's just that had dark pool. Trading venue. Doesn't disclose. To move the outside world. What it's. Quote ours it's dated. And or the prices pretty clear that trade. So that you are in the dark about what those. Particular programmers have betrayed our and there are important -- so afraid that -- say that I want a place to trade. And eight look at the organized exchanges to New York Stock Exchange or the man that they will post a bit it. And ask quote in -- -- quote is the tree is the price that you can develop without getting gear treaty. They have is department you can buy it can edit guaranteed price at least for the first hundred shares. So I know going into the trade. What might. Health -- going to be what my gas prices going to be if I demand an immediate trade. However if I go to our pool at CNET and in fact I don't know what it was but it prices are and I don't know what does. -- -- After the trade has been. Have -- it. So that only a participant it trades -- the -- no one else. And so what these have been India quote so -- Well let's say that your big institution. And you know that people are looking at what you were going to trade. Because they think you have information. So -- go to -- organized. Exchange in trade. Immediately. The prices we feel the impact of that trade the -- to trade ties. Think the price and more importantly they could see -- the bit in the air from moving around. Which were conveyed the market that is information. So you're treating larger blocks of or you have information in each fallen -- -- anonymously. You wanna transfer your trees that these they're pool so that no -- About. And -- different than let's say that you knew that. Berkshire Hathaway and Warren Buffett who you might view as particularly relevant for information. It's going to trade. And he trade on the New York Stock Exchange the trades -- -- -- buy -- million shares but he breaks in the open two -- out of sheer increments. That would be information for you you could see that he's treating -- I think he's if he's -- -- -- should buy it to -- it and -- -- But she does so under the trade in a retreat along with them come to realize is information. In my trade and get a good price and more partly I can and see how the prices could move in the future. So Warren Buffett for instance can say I don't want people to know what country I wanna be in. You can go to the pool they could trade here with other traders that. -- have a difference of opinion people in the -- they're willing to -- but he looked to be you know. And as a result anonymity as well the big attractions for their -- And consequently. A lot of market rally is going are going to bear pulled because most of the trading today stand by institution. So. -- -- was that. I wouldn't want people to know because in many people would lose the world would political list. Well too many people would buy this stock ahead of me -- they'd be cannibalizing my information. So let's say. How -- day. By had a head of news if they can't react until you see. Him to see you make the boss. That's -- these other traders Japanese arbitrage or they're looking for the instances where people are trading and or for that -- frequency traders are looking for where people are -- And as a result of that when they see a big I order they say aha so he must know something. I don't know but I know but now -- treated as well. And so if there's big -- -- by as well likewise it is big felt they could sell as well. So big traders institutions. -- They're trades can be anonymous content they would have a tendency to try to put those into would -- pool. So that no one knows -- them that's trading. And they -- have minimal prices impact all worked as a result of the trade how much the price move. In concert with. And while you're at its first rate. And come back or the basic question. Is this errors -- -- -- -- Because. Your -- the institution with the award -- money or read in the tool. Does this. Make the on equal Manson even more on equal. It would appeal -- -- One on. One silica. Very good subject for review talks over the independent. Sony. In that we've world we're talking earlier about trucks. And and what it's doing in that frost boards and banking industry education. You -- him. And if you follow our own -- reunion Michael Lewis. A writer. Agree bring in the country and uber liberal world. Wrote a book recently and -- promoted more than sixty minutes and these the stock market is -- So we're stumbled on business in the number of an -- publications. Dark pool smoked that -- -- called those. In bills -- in best thing structure. And then it's -- Or pro part of the year and NCC's securities and exchange. And we -- have a protest with the Dave socialism and and it's the proposed troop commitments to doing your numbers. Professors -- tell me upon a pastor cliff. Where are pretty. In the way I think I understand it is evolve more and -- -- if a minute. And I award -- and best. But I don't ordered to I don't agree. Open market stock market more high frequency people -- to put them doing them you don't want the computers. To detect what I'm doing a may have a million shares -- million dollars routes open more break it up and two and 100000 dollar investment and more than of this dork who. So nobody sees what I am doing so that -- in Bozeman. Has its optimal return is that correct. That's correct exactly and let me just tell the readers or listeners. Our -- markets. Have been around for a long time. They've been around since the -- the late ninety's and and early 2000 period. Except we call them the upstairs market and so. Brokerage houses like Goldman Sachs toward the exchanges. Would have private treating rooms for investors. Think -- what by different name. -- -- -- the juniors -- little it's Colin dark pools. Good question I think. I think Beijing is that -- that -- right that that. Were the -- themselves and date they want it to have these venues. That would allow them to to trade anonymously. What's changed spill from the late ninety's to the early to -- -- period in the upstairs market. Is this year. That a number of trade center clearing. These are -- markets that you saw that in your opening introduction. This has grown a lot this has grown to forty to 50%. All of the volume. On the New York Stock Exchange. Let's say that than your stock exchange and Amex and aspect. Our reporting. Two billion shares traded that they're four billion what you could imagine that. Of that 2000000001. Billion. Were treated additionally konduz their pool market. So what's changed it via mobile ultra rating that's occurring on this on this market. And when you mentioned the word. -- it's it's obviously loaded term because that means that some nefarious characters out there and they're taking. Consumer surplus there from all of the perpetrators in the market. Debt that is and unfortunate. It is a concern. That we have this huge market undocumented real. Where half the trading volume is taking place. And I do believe this is the case. Where you now have a very fragmented market where you have once had it trading rules for the organized exchange. Open market and opposite trading rules for the now I don't mean to any extent that the trading rules are that the difference that our homework it's at the same. Regulatory constraints that the best -- offer have to be established and you have to treat it the best price. And the government. To its value has trying to. Certain firms Goldman Sachs. While admitting though -- to build culpability. Has had a fine -- 800000 dollars. Four. Improper tree name it they've worked giving beer traders that trade the best -- out there. And as a result. This nomenclature markets being rigged it -- because certain traders. I don't know the retailer now. Have not gotten the best price and by the best part I mean -- that the bad spit the best bet -- -- prices. And as a result. That term -- kind of rings true people think well you know banks have done this -- mortgage fraud and and now they were entering into this -- -- trading and so anti trade am I going to find myself ripped off by these big guys. In an effective. Some of that is true in the instances where that happened have shown to be the case. Is -- expensive novel it is not it's some miniscule percentage. But the perception is still fair that I can be taken by big traders and -- can take to be taken advantage -- And we would like that not to be the case but unfortunately it is but it's a very very very small portion of small betrayed consummated. Well one lower scores went on what Michael and sixty minutes. They have the graphics that it they had is that the visuals that I can understand. And I broke watched that the -- from what could greet that he should be on and roll. And they'll march Michael debris to some of the very high frequency traders he accused. On MSNBC. And and it caught bits and pieces of what they were explaining. Or went well well so easily -- good point but. The presentation of sixty minutes the understanding that electing -- we. I came away -- for watching bowl. Thinking the stock market and some former -- from was rigged. Now regardless of where the rig is or it isn't. Is the general public. Invested enough in the stock market. For a lack of trust. To make a difference. Or is it. All about high frequency trading computers big companies big month. For the investing public spirit -- -- kind of its traders that would characters. -- is type trader at that day trader that think that they can go into the market and trade during good and consistently make money during the day. Our current contrast that with the long term investor who put their money in mutual fund. They have exposure to the stock market which should. And that percentage depends on their age. But they're long term investors and so markets cola markets -- have a percentage of their -- allocated to the market. My belief is that. Individual traders that are -- treating. Her. -- -- a huge advantage. To profitability. -- and the dirt out. They're not close to the information source that can penetrate effectively they don't. Understand float in the market and seeing a complete order book didn't know they can't keep attempt that their finger on the relevant information to price and their their guests. Hopelessly hopelessly outgunned in this regard there executing trades in second and part certificate and treated them intense development and their their. To spark. -- long term traders. Are believed to have a better markets on average over the last forty dirty or go -- consistently. And there are huge swings in the market and I believe the swings in the market are what -- people individual investors. Turned off -- pop star perk that they would just crashed 2000 and lost a significant ball. They wouldn't -- she's Great Recession in 2002008. And they feel as if everything Peters -- crashes in the immediate liked. Professor and portfolio and running out of time but. I don't like to brag but I think for the first saw him over and made at least this seat and a subject and the slight possibility. Of past. Club did you back at a later date that's been so fascinates me and true boosted me in the door -- -- had so much -- Gregory. Governor bill -- age 78 mortified the reopening of releasing on the North Shore and development of we're gonna talk about for acting. Coming up. -- -- brings a complete just you -- -- mean there's no. -- -- specialist. Did you cope with the needs of stumbled on. And see what true thing did Deborah gimmick called -- Sid zero. One big celebrity told 48866. Aided nine and 08 cent. A backlit. Were towards. Open to beaters brings and -- Friday and Sunday this past week. Absolutely beautifully. And a slot gives snowball burn an artist you've run errands and I think the gentleman that owned -- whose ruling. Certainly what do you think about the acting controversy. -- -- springs. As civil number one though wouldn't want to via. And the supplies and is said. Well. I would have detailed people abuse against -- me. Abuse brings is one most pristine beautiful places we have the state. -- who scored a perfect. And just. There's always say. Comptroller oh grew up in the oil company group almost called a mobile O. Not as important SO. Was excellent. And humble of acts. And. I've always believed in controlling Perot. And virtually everything vetted entailed -- -- it was many environmental controls that you could put on him big call those. I was asking for the product. Owner driver -- as cheaply you could wondered well when knobs Q would that be received -- electricity. As cheaply as we could and everything else on board and the products the petroleum products the plastics and everything. And and it's and so consequently. A wouldn't want to -- house because. On one side and kept him pinched. But on the other side and a workout Tuesday. -- what border Wednesday to other communities. That said we agree with you we don't want it either. Because at this point in time I can't imagine. A community. Doubt that had a bass -- laden -- they Lula. And saying yes. Give me some protecting. If you own the mineral rights energy your property. Like I can understand it unthinkable happened all of its. I think will be far. And in here with the thinking. -- the web sites this morning and -- there's group in -- technical concerns it is and so absent them. And -- sentence quote. Concerned citizens have become a force in the parish that seemingly can mobile. As it's warming of resident activists on behalf of the -- call. No -- large -- small. I think that's Rupert. -- more than 2000 members. Each of whom -- you sort of -- goes your dues as a centralized. Leadership structure. Whether an executive board overseeing and -- you of issues specific. Community the committee's. And the group of food old weary depressing politicians and agencies as varied. As the man to build -- -- of with the State's commissioner of conservation. And euros -- new corps of engineers to try to walk the for a acting well proposed. Ruby sprint and goes on there. And that I -- to. This story. Talents. Or legally allowed to ban fracking this was. Often the ruling of New York State High Court. -- -- -- -- the oil and gas industry in New York State's highest court ruled loan money Monday that any town can use zoning ordinances. Or. Combined community concern. The ban hydraulic fracturing. The Contra -- fuel extraction method known as fracking. When we come back lips continue this conservation. And a government number of other. Things -- put -- -- you probably haven't heard about but here's the basic question. If you lived in a -- brings Covington. -- He meet dissolves like compare them -- borders. And they wanted to perhaps. In your -- would jewel one and if you wouldn't. If all ten. -- crosses conference you know. I just walked in this Lou and -- new reasons to. Giving called what would you do to -- -- one -- celebrity to 03. 86 hits in -- and zero pizza we're thinking about fracking. For a factory and rock. By oil companies are -- would. Basically -- was simple and -- would go pars Ronald ruling and water pressure. They created microscopic. Cracks in the the rock and pull up natural gas in oil and what -- you wouldn't think -- about Upton and British brings brought that up from. And that QB you've got bullies in this record should gimmick called whose legs are wondered. If -- lived in the big springs I would do with -- they're voting against the lone all company's commitment for a it's just. Is this pro oil design them and soups to beautifully -- but as soon as sites that. Then somebody you pull away at me. Rule which now. Which state or which area of the country is. That you little well. If you roll on the were you -- you would love to live. And wouldn't like life style threaten. And in the former fashion. We're just woods' neighborhood would use and -- too. And it gives them who's thinking about that over the weakened this group concerned citizens -- -- them. At a news features built on and say you know there are becoming very powerful will -- -- 2000 members. In the run and being very professional. But. Also on this New York State all New York City -- Supreme Court is true that -- now. Can ban and -- Into eight. So. That kind of answers the question you -- as committee will Garland where it's known is that you would -- doesn't -- -- and soul because at least one State Supreme Court has said. Date they convey mountain -- and legislature that talking -- now. Here's why am I saying this is a real threat -- what's happening in contributing. It's only one company but it could be -- What they're doing is going to. -- offering people who own the property where they won't grow. 50000 dollars to release the -- company. From liability. And when I say relievers. I mean release did wrong. In fact give it blanket protection. That covers in the potential. Lawsuits or health problems. Property damage. Blanket protection. For claimed over noise. -- light smoke -- tune ups should. Air pollution vibrations. And the company called -- cute TV says the global work too hard and we could both Conte and Jews will be addressed. All the concerns. Consultants have been hard data collected on everything -- and we're doing that is good is it possibly can and here's 50000 -- Regardless what happen. You got letters to about suing. So to me that in new indications that. Oil companies or concerned about it and then you go to the a new study explains how just -- well it's forcing massive amounts of drone wage order in the ground or probably. Creating earthquakes and Oklahoma and Texas. So from 1976. To 2007. Oklahoma had three of corks 2008 to 2013. Imported for earthquakes. This year. 233. Not one that's in votes. As this goes to Bloomberg today. USC. As biggest oil producer. After overtaking Saudi Arabia and -- We are now number one. Come from the extraction of fuel rock from protecting. This comes. From. Interview commodity -- Bloomberg. There should go boom was playing a key role in the US would cover and our entire economy. If the US didn't have the energy supplies. Brought drawn by -- -- sure you -- place. Prices that the -- would be come leaps. On report. So. Let me go to call it is or what should think it'll complicated and Helen in the platoon double a -- issue. Talent. Might -- -- 88 -- it -- to capitalize basis. And that men and but he but he ran great but given out. I expansion of a few years because we can't beat that out. Right now. Just part of it was -- at least accept that Brian acreage. And we could not agreement -- on agreement. The percentage. So we did not find any. And what happened. We'd have a -- We automatically. Became public interest. And the money out whatever we didn't get much out of it that what we did get out of that. He expenses. That according to our percentage. Would take him out -- the road that they appreciated Scott. In what was that but that is what we got. Now we can't bomb at least that -- it people that some have that haven't gotten a penny of this company. Yet when it closed the well. That it what you're saying they want us to pay our share of the expense of close in the well. Which my chair but then. Which we -- at. So we're getting shorter term and we ask your question of fuel and you're grouped with the people who elected -- the people your -- Had a chance to vote on whether or not you would allow fracking would have been yesterday though. I am not -- -- Because it would do if we don't have that you know that are well and that speed expensive. That's my point that what we're looking at a Pulitzer alone complicated. Craig got about a minute -- huge call. Don't do. It. Taylor. Troubled -- On our new world -- -- it tracking. And well that they have minutes. Imperial carpet welcome -- property. I have three dollar and make it they could derail a lot of produce jobs -- -- people to work. I believe in Iraq you know believe in oil -- because. I and we have oil that we. No telling what would happen would this state. Obama -- -- all right. All right and you're more I got it it's just ma -- my point is all of this. It's it's a little bit more complicated than we're hearing. Because of it's valid for one place. Did that it seemed like should be valid for everybody. Common. All right don't go away is usually do something they -- interest and concerning them -- And also. The people they've been busy in the old and important though was accused that rule known doctor well. That may give -- and then it was a little --

Do you think the lawsuit filed by the levee board against the oil companies will continue or will Governor Jindal kill it?
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