15. Dirty Rotten Scoundrels

Now that the NASDAQ and New York Stock Exchange (NYSE) were publicly traded companies, they had to answer to stockholders, who naturally wanted a handsome return on their investment. It was a far cry from the days when the NASDAQ and NYSE were member-owned duopolies that functioned more or less like public utilities. The two, large exchanges were forced to scrape for trading volume against several dozen rivals ranging from automated exchanges to dark pools to 200 internalizers—those brokerage houses that matched trades in house. It wasn’t long before the exchanges woke up to the fact that high-frequency trading (HFT) firms were a flock of golden geese. Their trading translated into huge amounts of share volume. This, ...

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