Trading can be scary at times. Price discovery is not just for the upside as Fox Business and CNBC have delivered it. For an extended period of time leading up to the correction phase beginning after the 2007 highs, bulls ran around with flag waving zeal talking about new economies and hot over concepts about free enterprise and the beauty an American economic miracle spreading through out the world. Free enterprise is code for corporate welfare where government subsidies have now found their way into financial institutions whose pursuit of unprecedented compensation resulted in the need to create a pubic lending tree for those most private, if not most irresponsible, legions of talentless financiers populating Wall Street.
Now new rules will be implemented by the SEC around S&P 500 stocks which will result in the installation of circuit breakers to halt trading on any stock which moves10% in 5 minutes. This may work, but may need some tweaking. The futures markets, born in Chicago, have done an exemplary job for decades. Mark to market, here is the money. But that has always been too transparent for Wall Street because they need to transact in a world profit margins were greater because of the very nature of the cloudy product or deal.
The biggest problem for the markets is letting financial institutions remain virtually unregulated to trade mystery financial concoctions.
