19. The Vigilantes

The problem the Securities and Exchange Commission (SEC) faced in 2010 was that, until it had data from all of the exchanges and other trading centers with order-routing histories, it would not be able to make up its mind whether high-frequency trading (HFT) was benevolent or evil. The SEC was in the process of collecting that hard data, but the process was taking months. Also, the agency did not have computing power to crunch the numbers on its own. It planned to build such a system, but in the summer of 2010, it had to rely in the exchanges for this, too. And the exchanges were the proverbial foxes guarding the henhouse.

Connaughton, Senator Kaufman’s right-hand man, railed, “You’ve got to open the circle somehow. You’ve ...

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