The SEC basically thinks high-frequency trading is fine, but it knows you don't think that, and it wants to be tactful. It could just explain that markets aren't rigged, but "markets are rigged" is sort of unfalsifiable.
We doubt that these old-school managers were truly better off in the pre-HFT world, but it's hard to prove either way. And if they're right, it may be only because HFTs have made the markets more efficient
The Libyan Investment Authority recently sued Goldman over some 2008-vintage derivatives trades gone wrong. I wrote about it last week but didn't yet have Libya's complaint. That came out today -- here is the complaint, or in British the "Particulars of Claim" -- and it's fun reading
The short story is that U.S. companies can, with a certain amount of effort, move their legal address to Ireland or wherever and more or less avoid paying any taxes. This is called an "inversion," and the math is pretty straightforward.
Why is the Justice Department suing Standard & Poor's for mis-rating structured credit securities before the financial crisis, and not suing Moody's, which gave a lot of the same products the same ratings? I have a theory, but Standard & Poor's has another, and theirs is a corker:
A claim that is sometimes made about Bitcoin is that it is a way to send money without incurring transaction fees. This strikes me as mostly false, but in an interesting way, and I had a fun conversation about it on Twitter today; let me share it with you.
A long time ago some big banks decided that it would be good to sell interest-rate derivatives. To do that they needed an interest rate on which to sell derivatives. Various possibilities presented themselves -- Treasury rates or whatever -- but the interest rates that the banks themselves paid on short-term borrowing had an especially obvious appeal as an index.