It seems like the knee-jerk reaction to the “Flash Crash” in the markets is the call for yet more regulation on Wall Street, in particular the implementation of even more circuit breakers. Congress seems to think that in the event, or series of events, that causes the market to move swiftly down (nobody seems to be worried about a big rally….sorry short sellers) these impediments would slow the decline. Would they really turn around a tide? Yes, it may slow things down a bit, but in my opinion, the market is going to do what it wants. If anything, limits just generate pent-up momentum so when the limit, or circuit breaker is surpassed and the flood gates open, the surge is huge.
Instead of adding limits to markets like the E-Mini futures, why not increase the communication between the various exchanges so that the markets can be monitored holistically, not just independently. Work on understanding how things like the E-Mini futures and other markets trade and fit into the whole instead of creating false floors that are just going to give way. We can’t stop a bear market. It seems like Congress wants to legislate its way to a bull market. I understand that there is a difference between trying to eliminate big, crash-like days but one gets the impression that Congress both wishes to punish Wall Street for the ills of the world and at the same time, legislate a bad day away.
Futures trading involves substantial risk and is not suitable for all investors
No comments:
Post a Comment