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View Diary: Krugman On "The Joy Of Sachs," As Frontrunning Truths Emerge (292 comments)

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  •  this diary is conflating (2+ / 0-)
    Recommended by:
    nyc in exile, Badabing

    an industry-wide issue (the advent of flash orders) with the recent spate of stories/exposes about Goldman Sachs.

    That is not to say that both aren't serious problems, but the flash order situation is originating at the exchange level, as these different ECN's fight for market share. Goldman is a market participant, and while GS can benefit from market orders, they can also suffer, to the extent as a market-maker they establish a NBBO price which is not dealt on due to a flash order effectively leaping in front of them.

    GETCO was one of the complainants here, and they are also a market-making firm. GS does a ton of that stuff, as well as manage customer order flow. The GS picture is by definition much more complex.

    GS has without a doubt engorged itself at the public trough, and engages in all manner of financial shenanigans, but fladem is correct--the premise of this diary is not supported by the evidence, and is a little tin-foil hattish in nature.

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